Editor’s Note: This article has been generously contributed by Glen Tate of 299Days.com. Glen is the author of the 10-part series 299 Days, which is inspired by his own life and personal journey. It begins with 299 Days: The Preparationand introduces us to a husband who awakens to the fragility of modern society and embarks on a personal journey that introduces him to a world of self-reliance and liberation.

In the following article Glen covers an issue that is very dear to most preppers – what to do when neighbors, friends and family come knocking. With limited resources available we’re all going to have to make tough decisions. Like many of us, Glen plans on helping those truly in need. But what about those who refused to see the warning signs and stuck their head in the sand, perhaps even lambasted you for your extreme ideas and theories? Instead of being frugal and preparing, they focused their efforts on entertainment and good times.

But when the good times end, they will come to you for help. What will you do when they show up at your front door?

“I’ll Come To Your Place When SHTF” – No You Won’t By Glen Tate Author of 299 Days(This post is something you can send to your friends or print out and hand to them when SHTF.)

Dear Friend: I love my friends, but I will shoot you if I have to. I’m serious. Here’s why.

I tried to persuade you to prepare for what’s coming and, in the process, revealed that to you that I’m preparing. You realized that I have food, guns, etc., and ended up saying, half kidding but half serious, “I’ll come to your place when SHTF.”

No you won’t. I will shoot you. If you threaten me and my family, I will use force to defend against any threat. And showing up at my place hungry and unprepared is a threat to me. You will eat my food and use up my medical supplies, generator, firewood, etc. That’s less of these life-saving things for me and my family. That’s a threat.

Is this greed on my part? No. I will take care of the truly needy – those who cannot take care of themselves. But you are different. Very different. You had plenty of chances to prepare for yourself.

But what did you do? You spent the weekends watching football, went on expensive vacations, and never made your spouse mad at you with your “crazy” ideas that something bad was happening. You didn’t do shit because… you would just come to my place. Problem solved, right? You didn’t need to spend time, money, and create domestic strife because I did that all for you.

Not. Why should I spend my time, money, and stress just so you can waltz into my place and live happily ever after? I’m a nice guy, but – really? – I’m going to spend my (very limited) free time, disposable income, and domestic tranquility just so you can have a leisurely life and more material comforts pre-Collapse while I don’t?

Why do you think I will sacrifice enormous amounts of my time and money so you can enjoy yourself while I’m slaving away? Would you assume you could come over and leave your broken car at my house? That I would just spend thousands of dollars on parts and several weekends fixing it and then hand it over to you with a smile – just because I’m a “good guy”? Would anyone expect that?

You do, apparently. You actually expect to waltz over to my cabin and receive – with a smile – thousands of dollars of food and other supplies that took me all my weekends to acquire and store.

So, my grasshopper friend (as in the story of the grasshopper and the ant), here is your official warning: if your “plan” for you and your family’s safety is to come to my place, you’re wrong. When you show up, I’ll ask you to leave. When you don’t, I’ll point a gun in your face. If you refuse to leave, I will shoot you. You are a threat to me.

You had years of time and very clear warnings to get ready. But you didn’t. Hey, I love football but haven’t been able to watch a game in a few years; I’ve been fixing up the cabin, buying supplies, and training with the Team. I spent a lot of money doing all these things so I haven’t gone on a long vacation in… forever. I have had several difficult times with my wife because of all the prepping I’m doing; I could have easily done what you did, which is just say “Yes, dear” and not prepare because she didn’t want you to. I hope this message jolted you. There’s still some time. Go prep.

Time and again we are reminded why it is prudent to have a backup plan just in case things go wrong. You’ve already got car insurance, house insurance, medical insurance and life insurance. But what about disaster insurance? And no, we’re not talking about a piece of paper guarantee issued by some behemoth corporation who you’re supposed to call when things go wrong.

Real disaster insurance in this context refers to your own personal and familial emergency reserve supplies and strategies, to be consumed and implemented when all hell breaks loose.

(Panic In Northeast: Tens of thousands raid grocery stores in search of food and supplies)

What’s happening in the North Eastern part of the United States right now – “Snowpacolypse” – should convince anyone who hasn’t done so yet to prepare themselves for short- and long-term calamities. They happen quite regularly all over the world. We’ve seen them hit time and again in both, first and third world nations in the form of storms, natural disasters and even economic meltdowns. Yet, despite the repeated media broadcasts of suffering and complete destitution often wrought by these events, millions of people still laugh at the notion that, as even the government recommends, you should have a two week emergency supply of food, water and other disaster gear.

It is these very people – the ones who call preppers crazy and snicker at their idea of prudent preparedness and self sustainability – who will be out in force to loot, pillage and kill for these critical lifesaving supplies when a widespread disaster or emergency strikes their area. And no, we’re not talking about a 3-day scenario like a snow storm, which is limited in scope and comes with warnings ahead of time, with supply lines being restocked soon after the storm passes.

Rather, we’re talking about any number of events that are capable of crippling our entire nation in one fell swoop for an extended period of time lasting two weeks or more. These may include national-scale disasters such as a cyber-attack on our utility infrastructure, a super electro-magnetic pulse weapon that takes down our power grid, or a massive financial collapse that locks credit markets and makes resupply of essentials like food, medicine and gas impossible.

All of these events and numerous others like them, though unlikely, remain a plausible and serious threat to our way of life because they are capable of literally sending us back into the middle ages overnight. Should such a scenario ever become reality, then guess who’ll be coming over looking to take your supplies? Here’s a hint. They’ve been lining up in droves at local super markets and clearing shelves all over the North East as a massive snowstorm approaches.

Store shelves are cleared within hours of people realizing that a disaster is in progress.

We know what you’re thinking, “it’s just a snow storm.” And you’re right. These short-term events are nothing to really worry about. Even if you got to a grocery store late and couldn’t get food or fresh water you can still go over to a friend’s house or perhaps knock on your neighbor’s door for some food to get you by. But should the disaster facing the population be something more severe, when people have realized that no re-supply is coming because our just-in-time transportation system has shut down, then you can fully expect that frantic knocks on peoples’ doors will be ignored. Then what?

The answer is simple. As The Prepper’s Blueprintauthor Tess Pennington notes in Anatomy of a Breakdown, you can expect widespread societal breakdown within 72 hours:

Have you ever heard the saying, “We’re three days away from anarchy?”

In the wake of a disaster, that’s all you have is three days to turn the crazy train around before crime, looting and chaos ensue.

…

Multiple factors contribute to societal breakdowns including failure of adequate government response, population density, citizens taking advantage of the grid being down and overwhelmed emergency response teams.

For whatever reason, 3-5 days following a disaster is the bewitching hour. During this short amount of time, the population slowly becomes a powder keg full of angry, desperate citizens.A good example is the chaos that ensued in New Orleans following the absence of action from the local government or a timely effective federal response in the aftermath of Hurricane Katrina. In such troubled times, people were forced to fend for themselves and their families, by any means necessary. This timeline of Hurricane Katrina effectively illustrates “the breakdown,” and within three days, the citizens of New Orleans descended into anarchy, looting and murder

The majority of the looting, and certainly the despair, can easily be prevented with basic preparedness strategies that include managing your own food supply and stockpiling key supplies. In her free 52 Weeks to Preparedness web series Pennington outlines scores of essentials that you won’t really know you need until you need them, including food supply lists, medical items, toiletries, alternative power sources, and home defense tools.

At the very least, every American should have a stockpile, even if just a couple of boxes that fit in your closet, containing the following:

Meals Ready To Eat – These are full course meals that pack a caloric wallop and will suffice just fine for a period of two weeks or more. They are compact and easy to store, and given their relative low cost, are an excellent investment not just for emergencies in your home, but something to take hiking, camping or leave in your car in case you find yourself broken down in the middle of nowhere. High density emergency food bars are another option to diversify your reserves.

Water Reserves – Expect water utility companies to be out of operation as employees stay home to care for their families. This happens in almost every major disaster, meaning that you either better have effective water filtration and treatment supplies, or have reserve water packets.

Medicine – Basic first aid kits are an absolute must. A small cut can do serious damage over a two-week period when there is no doctor.

Toiletries – You’ll want some reserve toilet paper, for obvious reasons. But also consider sanitation as a key preparedness strategy, because if your toilet doesn’t flush then things will get ugly very quickly.

For an extensive list of preparedness considerations, supplies and strategies check out the free 52 Weeks To Preparedness web series.

At last count some 1% of Americans, roughly three million out of our nation’s 300-plus million people, have taken any steps to prepare. It’s a sobering statistic to be sure, especially considering that the Department of Homeland Security has warned people to stockpile at least a two week supply of food and water rations just in case.

Most Americans, it seems, still think the government will be there to provide assistance when the worst happens. The problem, of course, is that despite the millions of meals-ready-to-eat they have stockpiled, they will not have the resources to deal with 300 million desperate people.

The following statement from one San Francisco resident hit by last year’s West Coast storm pretty much sums it all up:

“I couldn’t get my car out of the garage, I have no food, I have no cash, so I’m trying to forage for something.”

After the 72-hour mark this individual and others like him will have no choice but to go out “foraging” for food. They’ll likely be armed, operating in groups and they’ll be going door-to-door.

Solar maximum has passed. What climate effects will come next?Austin, January 4, 2015 – Solar maximum activity peaked in April 2014 at an exceptionally low 81.9 spots/day. Waning solar activity in 2015 will begin the long, inexorably journey towards solar minimum over the next half decade or so.

If solar physicists are correct, solar activity could be very low for several decades to come. How that will affect climate change is anyone’s guess, but low sunspot activity has already been identified by the United Nation’s International Panel on Climate Change (IPCC) as one of the main causes for the 15+ year “hiatus” from atmospheric global warming.

The Royal Observatory of Belgium released December’s official monthly international sunspot numbers on January 1, 2015. Sunspots increased again in December, but the 13-month smoothed sunspot number that defines solar maximum declined for the 2nd month in a row. Given that solar maximum is a 13-month running average, no one knows maximum has been reached until at least seven months after the fact.

What does the downturn in solar activity mean for earth’s long-term climate change? One legitimate comparison of the current situation on the sun is to a cold period on earth called the Dalton Minimum. It happened 200 years ago.

Current solar activity is similar to the Dalton Minimum. Credit/Steve Davidson using SILSO data

There were three declining solar cycles leading into the Dalton Minimum, just like now. The third exceptionally weak cycle had a rare higher secondary peak than its first when the Dalton was reached, just like now.

That cycle was followed by a decline to zero spots. The period of zero spots lasted nearly two years before another weak cycle occurred. The match to current activity isn’t exact, but it’s eerily similar. There is modern supporting evidence that the sun will have an exceptionally weak cycle next time, just like the Dalton.

Sunspots are becoming harder to see and weaker. Credit/Dr. Leif Svalgaard Research Page

Umbral intensity is a measure of how black the center of the average sunspot is compared to its surroundings. An intensity of 1 means the sunspot is invisible. Sunspots have been fading away since the late 1990s. In the last 3-4 years, though, the fading has leveled off.

Umbral magnetic field is a measure of the strength of the average sunspot, measured in Gauss. The lower the number, the weaker the sunspot. Strong magnetic fields are what cause giant solar flares and coronal mass ejections (CMEs) that dramatically affect earth. Sunspots cannot form with a field strength below 1,500 Gauss. In the last 3-4 years the decline in magnetic field strength has leveled off, too.

When this data was first published in 2011 it caused quite a stir among solar physicists. Some predicted sunspots would totally disappear after the current cycle ended. It doesn’t look like that will be the case after all. It looks like the next cycle, Cycle 25, will be another weak one, just like during the Dalton Minimum.

Reliable global temperature data does not extend further back than about 1850, fifty years after the Dalton. However, anecdotal evidence suggests there were very cold winter temperatures in the northern hemisphere during that time period.

The current sunspot cycle most closely matches Cycle 12, which peaked in 1883. That one is within reliable global temperature records.

The current solar cycle is best matched to Cycle 12. Credit/Steve Davidson using SILSO data

Both Cycle 12 and the current cycle have a rare secondary peak higher than the first. That has got to mean something.

According to IPCC data, the period of the 1880s to the early 1900s was characterized by a general decline in earth’s global atmospheric temperature.

Cycle 12 and the two cycles following it were exceptionally weak cycles leading into the early 1900s. It corresponded to declining global temperatures. Coincidence? Not likely.

ConclusionsSolar sunspot maximum was reached in April of 2014. That did not become known until recently because solar max is computed as a 13-month running average. You can’t know it has been reached until at least seven months after the fact. There have been two months of decline since then, so it is reasonably certain the maximum was finally reached. As it is, it was over two years later than originally predicted.

If the current cycle follows past solar behavior then 2015 will see a steep decline in solar activity as it progresses toward solar minimum in the next five years or so.The current cycle (Cycle 24) has strong similarities to both the Dalton Minimum and Cycle 12 that peaked in 1883. Both time periods are associated with cold earth temperatures. Cycle 12 is more meaningful because it is supported by current United Nations IPCC data.
That being the case, it’s time to start thinking about breaking out the cold weather gear..

“Forecasters predict that a new ice age will begin soon,” says this article on russia-ic.com.

“Habibullo Abdusamatov, a scientist from the Pulkovo Observatory of the Russian Academy of Sciences considers that the sharp drop in temperature will start on the Earth in 2014. “According to the scientist, our planet began to “get cold” in the 1990s. The new ice age will last at least two centuries, with its peak in 2055. “It is interesting, that the same date was chosen by the supporters of the theory of global warming. “The expected decrease in temperature may … become the fifth over the past nine centuries, reports Hydrometeorological Center of Russia. Experts call this phenomenon the “little ice age”, it was observed in the XII, XV, XVII, XIX centuries. This cyclicity makes the theory of upcoming cold weather in XXI century look like truth.” http://russia-ic.com/news/show/13717#.T0Q3Ms7rk9C Thanks to Thomas McHart, Stephanie Relfe for this link

Russian scientist to alarmists: ‘Sun heats Earth!’ 20 May 10 – CHICAGO – Habibullo Abdussamatov, head of space research at Pulkovo Astronomical Observatory in St. Petersburg, Russia, predicts that a new “Little Ice Age” could begin in just four years.
I sat just ten feet away from Abdussamatov as he made this startling assertion at the Heartland Institute’s 4th International Conference on Climate Change in Chicago just two days ago.
Jerome R. Corsi from World Net Daily covered the proceedings exceedingly well, and I am quoting or paraphrasing him extensively here.
In a two-part video recorded at the conference by WND (link below), Abdussamatov explains that average annual sun activity has experienced an accelerated decrease since the 1990s.

Habibullo Abdussamatov Head of the Russian-Ukrainian project “Astrometria” on the Russian segment of the International Space Station, Abdussamatov’s theory is that “long-term variations in the amount of solar energy reaching the Earth are the main and principal reasons driving and defining the whole mechanism of climatic changes from the global warmings to the Little Ice Ages to the big glacial periods.”

In his speech, Abdussamatov took on advocates of the theory of man-caused warming who want to curtail our use of hydrocarbon fuels. He contended, instead, that a reasonable way to combat coming cooling trends would be “to maintain economic growth in order to adapt to the upcoming new Little Ice Age in the middle of the 21st century.”

Sun’s activity determines temperaturesAbdussamatov argues that total sun irradiance, or TSI, is the primary factor responsible for causing climate variations on Earth, not carbon dioxide.

Carbon dioxide is “not guilty,” says Abdussamatov. “As for what lies ahead in the coming decades, it is not catastrophic warming, but a global, and very prolonged temperature drop.”

Abdussamatov pointed to the English astronomer Walter Maunder, who noticed that sunspots had been generally absent from 1645 to 1715. That period coincided with the middle and coldest part of the Little Ice Age (see article D, below), which began around 1650 and extended through 1850.

“There is now an unavoidable advance toward a global decrease, a deep temperature drop comparable to the Maunder minimum,” he wrote. “Already there are signs of the future deep temperature drop.”

“The observed global warming of the climate of the Earth is not caused by the anthropogenic emissions of greenhouse gasses, but by extraordinarily high solar intensity that extended over virtually the entire past century.” “Future decrease in global temperature will occur even if anthropogenic ejection of carbon dioxide into the atmosphere rises to record levels.

“The implementation of the Kyoto Protocol aimed to rescue the planet from the greenhouse effect should be put off at least 150 years.”

I have the utmost respect for the courageous scientists who presented at this convention.

Western Europe experienced a general cooling of the climate between the years 1150 and 1460 and a very cold climate between 1560 and 1850 that brought dire consequences to its peoples. The colder weather impacted agriculture, health, economics, social strife, emigration, and even art and literature. Increased glaciation and storms also had a devastating effect on those that lived near glaciers and the sea.

Impact on AgricultureLamb (1966) points out that the growing season changed by 15 to 20 percent between the warmest and coldest times of the millennium. That is enough to affect almost any type of food production, especially crops highly adapted to use the full-season warm climatic periods. During the coldest times of the LIA, England’s growing season was shortened by one to two months compared to present day values. The availability of varieties of seed today that can withstand extreme cold or warmth, wetness or dryness, was not available in the past. Therefore, climate changes had a much greater impact on agricultural output in the past.

Fig. 16 and 17 show the price of wheat and rye, respectively, in various European countries during the LIA.

Western Europe experienced a general cooling of the climate between the years 1150 and 1460 and a very cold climate between 1560 and 1850 that brought dire consequences to its peoples. The colder weather impacted agriculture, health, economics, social strife, emigration, and even art and literature. Increased glaciation and storms also had a devastating affect on those that lived near glaciers and the sea.

Impact on HealthThe cooler climate during the LIA had a huge impact on the health of Europeans. As mentioned earlier, dearth and famine killed millions and poor nutrition decreased the stature of the Vikings in Greenland and Iceland.

Cool, wet summers led to outbreaks of an illness called St. Anthony’s Fire. Whole villages would suffer convulsions, hallucinations, gangrenous rotting of the extremities, and even death. Grain, if stored in cool, damp conditions, may develop a fungus known as ergot blight and also may ferment just enough to produce a drug similar to LSD. (In fact, some historians claim that the Salem, Massachusetts witch hysteria was the result of ergot blight.)

Malnutrition led to a weakened immunity to a variety of illnesses. In England, malnutrition aggravated an influenza epidemic of 1557-8 in which whole families died. In fact, during most of the 1550’s deaths outnumbered births (Lamb, 1995.) The Black Death (Bubonic Plague) was hastened by malnutrition all over Europe.

One might not expect a typically tropical disease such as malaria to be found during the LIA, but Reiter (2000) has shown that it was an important cause of illness and death in several parts of England. The English word for malaria was ague, a term that remained in common usage until the nineteenth century. Geoffrey Chaucer (1342-1400) wrote in the Nun’s Priest Tale:

You are so very choleric of complexion. Beware the mounting sun and all dejection, Nor get yourself with sudden humours hot; For if you do, I dare well lay a groat That you shall have the tertian fever’s pain, Or some ague that may well be your bane.

In sixteenth century England, many marshlands were notorious for their ague-stricken populations. William Shakespeare (1564-1616) mentioned ague in eight of his plays. Oliver Cromwell (1599-1658) died of ague in September 1658, which was one of the coldest years of the LIA.

Five indigenous species of mosquito are capable of transmitting malaria in England where they prefer the brackish water along river estuaries. The anaerobic bacterial flora of saline mud produces a strong sulfur odor that was widely believed to be the cause of agues in salt marsh areas (i.e. Shakespeare’s “unwholesome fens.”) The term malaria comes from the Italian term “mala aria” meaning “bad air.”

Impact on EconomicsIn addition to increasing grain prices and lower wine production, there were many examples of economic impact by the dramatic cooling of the climate. Due to famine, storms, and growth of glaciers ,many farmsteads were destroyed, which resulted in less tax revenues collected due to decreased value of the properties (Lamb, 1995.)

Cod fishing greatly decreased, especially for the Scottish fisherman, as the cod moved farther south. The cod fishery at the Faeroe Islands began to fail around 1615 and failed altogether for thirty years between 1675 and 1704 (Lamb, 1995.) In the Hohe Tauern mountains of the Austrian Alps, advancing glaciers closed the gold mines of the Archbishop of Salzburg who was one of the wealthiest dukes in the empire. The succession of two or three bad summers where the miners could not rely on work in the mines caused them to find employment elsewhere, which resulted in an abrupt end to the mining operations (Bryson, 1977.)

Not all of the economic impact was bad. The fertile fishing grounds of the present day Newfoundland Banks were thought to have been found by fisherman in the late 1400’s who were looking for the fish stocks that had deserted their former grounds as the result of the movement of colder waters from the north (Lamb, 1995.)

English fisherman benefited by the southern movement of herring normally found in the waters off Norway. This increase in deep-sea fishing helped to build the maritime population and strength of the country (Lamb, 1995.) The failure of crops in Norway between 1680 and 1720 was a prime reason for the great growth of merchant shipping there. Coastal farmers whose crops failed turned to selling their timber and to constructing ships in order to transport these timbers themselves (Lamb, 1995.)

Social UnrestConditions during the LIA led to many cases of social unrest. The winter of 1709 killed many people in France. Conditions were so bad, a priest in Angers, in west-central France, wrote: “The cold began on January 6, 1709, and lasted in all its rigor until the twenty-fourth. The crops that had been sewn were all completely destroyed…. Most of the hens had died of cold, as had the beasts in the stables. When any poultry did survive the cold, their combs were seen to freeze and fall off. Many birds, ducks, partidges, woodcock, and blackbirds died and were found on the roads and on the thick ice and frequent snow. Oaks, ashes, and other valley trees split with cold. Two thirds of the vines died…. No grape harvest was gathered at all in Anjou…. I myself did not get enough wine from my vineyard to fill a nutshell.” (Ladurie, 1971) In March the poor rioted in several cities to keep the merchants from selling what little wheat they had left.

The winter of 1739-40 was also a bad one. After that there was no spring and only a damp, cool summer which spoiled the wheat harvest. The poor rebelled and the governor of Liège told the rich to “fire into the middle of them. That’s the only way to disperse this riffraff, who want nothing but bread and loot.” (Ladurie, 1971)

Lamb (1995) reports the occurrence of cattle raids on the Lowlanders by Highlanders who were stressed by the deteriorating climate. In 1436, King James I of Scotland was murdered while hunting on the edge of the Highland region near Perth. The clan warfare grew so bad that it was decided that no place north of Edinburgh Castle was safe for the king so Edinburgh became the capital of the country.

In England, the effect of starvation and the poor condition of the country encouraged men to enlist during the War of the Roses (1455-1485.) As tillable land was converted to other uses such as sheep rearing, the landlords who organized the conversions became the focus of many hostilities.

One group in particular suffered from the poor conditions – people thought to be witches (Behringer, 1999.) Weather-making was thought to be among the traditional abilities of witches and during the late fourteenth and fifteenth centuries many saw a great witch conspiracy. Extensive witch hunts took place during the most severe years of the LIA, as people looked for scapegoats to blame for their suffering.

One of history’s most notorious quotes might have been due in part to a rare extremely warm period during the LIA. In northern France in 1788, after an unusually bad winter, May, June, and July were excessively hot, which caused the grain to shrivel. On July 13, just at harvest time, a severe hailstorm (which typically occurs when there is very cold air aloft) destroyed what little crops were left. From that bad harvest of 1788 came the bread riots of 1789 which led to Marie Antoinette’s alleged remark “Let them eat cake,” and the storming of the Bastille.

Art and LiteratureWriters and artists were also influenced by the great change in climate. In 1816, “the year without a summer,” many Europeans spent their summers around the fire. Mary Shelley was inspired to write Frankenstein, and Polidori, The Vampire. Both authors, together with Byron and Percy Shelley, were in Switzerland, near Lake Geneva where Byron said “We will each write a ghost story.” Percy Shelley also referred to a glacier in his poem “Mont Blanc” when he wrote “…and wall impregnable of beaming ice. The race of man flies far in dread; his work and dwelling vanish…”

Neuberger (1970) studied more than 12,000 paintings in 41 art museums in the United States and eight European countries to test his hypothesis that paintings would accurately reveal the climate record. These paintings covered the period from 1400 to 1967. He categorized the blueness of the sky into a three-step scale consisting of pale blue, medium blue, and deep blue. Cloudiness was estimated according to the U.S. airways code: clear (less than 10 percent coverage), scattered (10 to 50 percent), broken (60 to 90 percent), and overcast (more than 90 percent cloud coverage.) In addition, the types of clouds were observed according to four families: high, middle, low, and convective (vertically-developed) clouds. Neuberger separated his data into three epochs. According to the data in Fig. 19 below, during the second epoch when the LIA was at its peak, cloudiness and darkness prevailed.

Neuberger suggests that the similarities between the second and third epochs have more to do with a stylistic change in the third epoch to impressionism which produced hazy atmospheres and also to an increase in industrial pollution.

Frequency of StormsFig. 20 shows the number of reported severe sea floods per century in the North Sea region.

Figure 20: Number of reported sea floods per century in the North Sea region. (Source: Lamb, 1995)

During the LIA, there was a high frequency of storms. As the cooler air began to move southward, the polar jet stream strengthened and followed, which directed a higher number of storms into the region. At least four sea floods of the Dutch and German coasts in the thirteenth century were reported to have caused the loss of around 100,000 lives. Sea level was likely increased by the long-term ice melt during the MWP which compounded the flooding. Storms that caused greater than 100,000 deaths were also reported in 1421, 1446, and 1570. Additionally, large hailstorms that wiped out farmland and killed great numbers of livestock occurred over much of Europe due to the very cold air aloft during the warmer months. Due to severe erosion of coastline and high winds, great sand storms developed which destroyed farmlands and reshaped coastal land regions.

The issue of survival in a big city following a major disaster is a serious one. In 1800, only 3 % of the world’s population lived in cities. Today, about half of the world’s population lives in urban areas, and in developed countries up to 70 % or more live in larger cities. New York and Los Angeles are among the top 10 most populous cities in the world. There are 30 MSAs (Metropolitan Statistical Areas) within the United States which have 2 million people or more.

What could possibly go wrong?

Hopefully nothing… however don’t count on it. A microcosm of what could go wrong already happened years ago in New Orleans. Remember Katrina? What about Hurricane Sandy not that long ago in the heavily populated Mid Atlantic region of the Northeast? Does anyone remember the LA riots? What about Ferguson MO?

There are all sorts of natural or man-made events which could spell disaster for the big cities.

What about this one… There are approximately 50 percent of Americans who get some sort of government benefits and there are 82 million households on Medicaid. The amount of people on SNAP (food stamps) has nearly doubled since 2006. And this is only from 2011 Census data. There’s little doubt the numbers are even worse today. How many of these people live in the cities or metropolitan areas? I would suggest that the majority do.

What happens if government assistance is reduced via a financial collapse, or perhaps by a devalued dollar through price inflation – which buys less product? What happens if EBT cards stop working or are ‘worth’ much less than before? I will tell you what happens… The dependent class will revolt.

Without going further down that rabbit hole (I digress), let’s think about survival in the big cities. Let’s face it. There are lots of you who live in the cities or heavily populated MSAs.

When considering one’s preparedness and/or how to survive in the city after a disaster – the thought processes, the plans, and the resulting actions will depend (very much) on the circumstances that one is preparing for. In other words, how bad of a disaster scenario and how long might it go on. These are judgment calls which are made during the event and are preconceived “what if” scenarios based on your own risk tolerance.

The first thing that many people will think to do (following a disaster while living in the city) is to simply ‘bug out’, get-out-of-dodge, leave the city to greener pastures. The problem is, many people really do not have another realistic place to go than where they are now. Unless you truly have a willing friend who lives away from the city, then you will need to think about Plan B. Besides, who’s to say that you could even get out of the city during certain disasters? For an obvious short-term localized disaster you could certainly try to get out and stay in a hotel somewhere out of the region. Traffic will certainly be snarled.

Plan B is to face the very real possibility that you will be stuck right there where you are now. In the city. This is a very bad situation for some disaster circumstances, however for other scenarios it is survivable. Much depends on initial severity as well as the expected length of time in which you will be adversely affected.

If any of the city infrastructure is severely damaged, you will probably be facing a relatively long time to recovery and some very serious problems. If the water and/or sewage is affected, then you are in big trouble. This could be the result of physical damage (e.g. a major earthquake, attack, etc..) or it could be the result of regional (or wider) power outage. If it’s the later, then you will need to understand the cause of the power outage so that you can reasonably determine the expected length of time until it’s re-established (very important to discover and know). A battery powered portable radio is an essential item to get news and information about the disaster.

A major electrical grid power outage could be caused by storm damage. Ice storms are particularly notorious for this, as well ask hurricanes which wreak wide spread damage. Often these types of weather related outages will be resolved within days or weeks because the power company brings in multitudes of crews from other regions to help with the repairs.

On the other hand if the power outage has been caused by a worse enemy, such as a ‘Carrington Event’ solar flare & CME, or by an EMP (electromagnetic pulse) attack, then this could be a life-ending event for many millions. How will you know? Some or all things ‘electronic’ may not be operational (fried). An entirely different approach must be taken to survive this. But that’s another subject.

Having said that, I believe that the biggest (general) factors to survival in the city is:
– the condition of the electrical grid
– the condition of the infrastructure
– the condition of the distribution networks which bring food & supplies
– the condition of the chaos and your security

For starters, while considering how to prepare for disaster while living in the city, figure out how you will survive based on the four previously mentioned factors. Since most (typical?) disasters are relatively short lived (hours, days, maybe a week or two), then the foremost important thing to do is determine what you will need (in your city apartment or home) to survive without these things. In other words, you’re on your own (completely) for a day or two, maybe a week, or maybe even two.

We’re talking about some of the basics such as water, food, sanitation, keeping warm (during the winter) or keeping cool (summer), and your personal security. Although depending on exactly where you live, your personal security should not (generally) be an issue at first, given a short term disaster. Just keep in mind that when it begins to go on past day-3, then there will be increasingly desperate unprepared people – at which time security will become an increasing issue.

Water
Water can easily be procured and stored. Figure at least 1 gallon of water per day per person. More is (always) better in this regard. You can stock up on cases of water bottles and/or fill up some water storage containers. Get yourself a quality drinking water filter. Most people forget the water when thinking about preparedness. If you’re reading this, there’s no excuse now…

FoodStore some foods which do not require cooking (important). Remember, you can safely eat grocery store canned foods without cooking (even though you’re used to heating them up first). Don’t forget the manual can opener. There is literally no excuse for anyone not to have enough food storage to survive several weeks.

SanitationImagine the scenario without running water. Consider keeping a quantity of ‘wet wipes’ or some such disposable cleaning wipes for hands or other duties. Know that you can flush a toilet without running water. If the power is out for long, this could become a big problem in the city if their generators are not working (or run out of fuel). Pumps are required to water to your faucets and to move sewage – which might ‘back up’ into buildings. Don’t laugh but a 5 gallon bucket (or your existing empty toilet) lined with a heavy duty trash bag (use kitty litter to pour over afterwards) is better than nothing. You could then tie and dispose of used bags somewhere outdoors (although it will be another difficult issue in the city).

Heating & Air Conditioning (Shelter)
A big issue for survival in the city following a disaster is the potential lack of HVAC (heating and air conditioning). Air (or lack thereof). Most apartment buildings (and large buildings in general) are designed to produce a climate controlled environment (which requires electricity). Many buildings do not even have windows which can be opened. Even if they do, it won’t be enough during the summer to prevent a virtual ‘cooker’ in such a building. And if during the winter, you will need to find a way to stay warm without the HVAC system (safely). Mostly, this means wearing warm winter clothes, jackets, hats, gloves, thermals, and having a cold weather sleeping bag. You can survive this way without heat – so long as you have adequate clothes and protection (shelter).

Personal SecurityYour personal security will potentially be at risk in the city if the disaster looms long. Face it – most people are not prepared whatsoever for disaster. These people will be ‘screwed’ in a moderate or long term event. Coupled with the dangers of desperate people doing desperate things will be the city gangs of thugs who will take advantage of the chaos. Avoid confrontation by being prepared ahead of time and staying home while you secure your own perimeter and go about the task of survival. For anywhere it is legal, I suggest owning a firearm. Learn how to use it at the range (most people who’ve never shot a firearm before are surprised at how much fun it is when they finally do ). The longer the disaster scenario plays out in the city, the more dangerous it will become for you. Know this and prepare for it accordingly.

Apart from water, food, shelter, security, there are countless other considerations and supplies which will help during a time of disaster. Browse this site (http://modernsurvivalblog.com) and others for lists and ideas. Some of the ideas are obvious ‘no-brainers’ such as a flashlight and extra batteries, while other ideas may really help you in other less obvious ways…

In conclusion, let me say this… during a complete collapse of society and/or SHTF, the cities will not survive. Today’s ‘Just In Time’ distribution will collapse and leave the cities as wastelands of descending chaos. When the trucks stop, it’s over. IF you sense that the disaster is leading towards complete collapse, then I would do everything in my power to get out of there.

Which asset is more secure than money in the bank?The answer is simple. It’s the asset that will still have value when the money or the bank collapse.

All over the world, when people have been faced with the prospect of having their savings wiped out or confiscated they have turned to hard assets – physical goods they could hold in their possession and trade if necessary – as protection.

Argentina, a country that is no stranger to economic hard times and hyperinflation, gives us a prime example of what becomes money when the system collapses.

At an inflation rate of 25%, while their currency loses significant purchasing power, Argentines have made a mad rush into gold, silver, and other tangible goods that retain their barterable value.

Like many Greeks, who have headed to the countryside to grow their own food in the midst of complete economic destruction, farmers in Argentina are hoarding the one tangible investment they know will not lose value, no matter what their currency does.

With world food demand on the rise, growers in the Pampas grain belt are filling their silos with soy rather than converting their crops into pesos, a currency that hit a new all-time low in informal trade this week.

Considering Argentina’s high inflation, clocked at about 25 percent by private economists, “money in the bank” is not as secure as storing soybeans next to their fields, many say.
“We are going to hang onto our soy. One can see higher prices ahead,” said Jose Plazibat, a partner with the firm of Bandurria and Plazibat Brothers, which farms more than 3,000 hectares near the town of Chacabuco in Buenos Aires province.

With their currency in meltdown and food demand around the world rising, these farmers understand where real value comes from.
1. Their food can’t be lost in the stock market.
2. It’s intrinsic worth cannot be vaporized in a banking collapse.
3. And they do not need to wait for anyone to deliver it to them, as they hold it in their personal possession.

Hoarding commodities – not the paper receipts that represent your ownership, but the actual physical good – is a powerful diversification strategy, and one that is a natural response to times of uncertainty and government run amok:

Argentina is going through the classic stages of economic collapse.

The government seized all pensions. They are destroying everything that gives the people incentive to be a society that emerges from the cooperation of everyone.

When government turns against its own people, even as the USA is currently doing, you end up with deflation insofar as the economy collapses and wages are not available, while hoarding emerges as does barter.……….source: Martin Armstrong

This strategy of buying commodities at lower prices today to consume at higher prices tomorrow can be implemented on a micro-economic personal scale in your own home. Doing so, especially with health and nutrition considerations, will not only provide you with long-term cost savings as global currencies continue to lose purchasing power, but insulate you against the possibility of a rush for food in the event of an emergency or widespread economic instability.

Whether you choose to stock your long-term food pantry by going to a grocery store, grow your own food in your traditional or aquaponics garden, learn to preserve it yourself, or prefer to do your own food storage packing, the key is to develop a plan and implement it now.

The US dollar isn’t getting any stronger over the next 10 years.
But the rice, beans, wheat, and pasta you stockpile will still have the same exact intrinsic value a decade from now as they do today.

.

B. Bartering Supplies That You Haven’t Thought Of; And Some You Have!29 Apr 2013, American Preppers Network, by Jalapeno Gal77
Pasted from: http://americanpreppersnetwork.com/2013/04/bartering-supplies-that-you-havent-thought-of-and-some-you-have.htmlWhen I think of bartering supplies my mind automatically goes to a SHTF scenario. There are a lot of lists out there for such scenes, but ultimately what you choose to barter is up to you. Many people stock things like silver, gold, cigarettes or alcohol or coffee. While these can be great items, they are also expensive.

I will admit, stocking up on cigarettes, coffee and alcohol do go against my health and religious beliefs, but it doesn’t stop me from storing it. I would much rather barter an item that I will never use or need, than to barter precious items I do need. In the end, what you decide to spend money on is your choice.

Below is a list of items I feel would make good barter items if, and only if, I have enough extra to get away with it:
• Salt: We store a LOT of salt. It has multiple purposes and back in the day, people actually used salt as currency because it was considered such a high trade value and hard to find. Salt can/was used to preserve food and it helps to eliminate the season availability of certain foods and allowed long distance travel.
• Toilet paper: Take the cardboard out and put them in a large vacuum sealed bag storage bag.
• Kitty litter or dehydrated lime for sanitation or easy clean up of human waste in buckets. Can you imagine what someone would trade for this?
• Matches/lighters
• Bleach
• Sugar
• Feminine supplies
• Flu/Cold Medicine
• Allergy Medicine
• Antibiotics/ Pain killers / fever reducer
• Bar Soap
• Seeds
• Toothpaste/toothbrushes
• First aid bandages
• Hydrogen peroxide (You could trade this by the cup or half cup.)
• We store small bottles of alcohol for trade. We also have bigger bottles for refills if they want to bring it back for more.
• Coffee: We vacuum seal coffee in smaller portions with 1-2 coffee filters in each bag of coffee. We also have 2 percolators to prepare the coffee if the person has no way to do so.
• Cigarettes: We do not store these but many people use them as barter items.
• Pipe Tobacco: Vacuum seal it to keep it fresh longer
• Spices
• Ramon Noodles: Very cheap and if someone is hungry then this would be good trade value.
• Beans: We stock the 15 bean soup because it comes with a spice packet in the soup. You could trade these by the bag or by the cup depending on the size family they have or if it’s an individual.
• Razors
• Coats/Warm Clothing: We purchase used coats at goodwill and thrift stores. All different sizes but especially kids coats. These can be stored in large vacuum sealed storage bags and hardly take up any room.
• Small candles (or wax , wicks and wick tabs for making candles.)
• Chickens: Chickens produce meat and eggs, both of which people will want.
• Fly tape/mouse traps
• Pesticides
• gel, diapers, formula
• Socks/underwear
• Information on growing food or slaughtering animals. You could print off some easy instructions and place them in binders.
• Fish hooks, weights, fishing line, bait
• Glow sticks
• Laundry soap powder
• Measuring spoons

These are just a few ideas to help you get started. Notice, I did not put silver or gold on the list. While this is a great item to have, I believe that if we are in a grid down situation, not many people are going to barter for something they cannot eat or use to stay alive. Please don’t misunderstand me, it is alright to have these items for yourself, but for bartering, I just don’t feel it will be helpful in that area.

[Mr. Larry ideas:
_a) If you develop or buy a 12 volt battery bank (several deep cycle 12 volt batteries) and a couple hundred watts of PV panels (150-300 watts), solar charger, inverter, and a battery charger for AAA and AA rechargeable batteries, you would continue to use your personal electronics during a local disaster or SHTF event.
_b) Additionally, if you stock an extra 50 to 100 AA and AAA Sanyo Enloop batteries, you would be set to operate a local “rent and recharge” battery service, thereby developing a “for food” customer base during a grid down scenario; it would only take recharging the batteries of maybe a half dozen families batteries to provide a significant portion of your “daily bread” or for the accumulation of other barter/trade items/services.].

There are a lot of different opinions as to what items will be best for barter in a post-collapse world where the underground economy may be the only viable economy for the passing of goods and services. That said, consider this a starting point as you begin to acquire goods for barter.

In no particular order, consider accumulating some of the following items for barter purposes. And keep in mind that in a post-collapse world, the items do not necessarily have to be new, but simply serviceable.

Water purification supplies including purification tabs and filters, household bleach.

Hand tools including hatchets, saws, machetes and general fix-it tools

Toiletries including toothpaste, dental floss soaps, shampoo (tip: save those small sized toiletries that are provided by hotels and motels)

Condoms

Latex or Nitrile gloves in a variety of sizes

Hard candy

Fishing supplies

Knives of various types including fixed blades, kitchen knives, and box cutters.

Condiments and Spices

Paperback books on a variety of subjects

Tobacco and cigarette rolling supplies

Amusements such as playing cards, crossword puzzle books, Sudoku

Pencils & paper

Pepper spray

Garden seeds

Flashlights

Vinegar and baking soda to use in DIY cleaning supplies

Empty spray bottles and squirt bottles

Hand pumps for both air and liquids

Mylar blankets and tents

Hand warmers

Sewing and mending supplies

Knitting or crochet needles and yarn

One thing you will notice that I have not included firearms or ammo and for good reason. In a post-collapse society, you might not know your barter partners well and may run the risk that they will use these items against you so that they can steal the rest of you stuff. One person’s opinion, anyway.

4 . Illegal (Mexican) immigration

A. Illegal Immigration1 Sep 2010, SHTF Plan.com
“…With a 10% unemployment rate, nationally, estimated by the government; it means there are more than 35 million Americans out of work. At more than 16% unemployed based upon Shadow Stats analysis, it means that more than 50 million Americans are out of work, while presumably, 30 million Illegal Latinos are still working. If these 30 million Illegal’s are not working in American jobs, what the hell are they doing here to survive? And if they are working in American jobs, why is this acceptable to our federal government?

Many false arguments arise with respect to the employment picture. The biggest fallacy is that these Latino foreign nationals are taking jobs Americans don’t want. Does any American citizen really believe that there are 30 million Latino “lettuce pickers” in the United States?

A. “Legal vs Illegal(–from the web: anonymous)
You have two families: “Joe Legal” and “Jose Illegal”. Both families have two parents, two children, and live in California . Joe Legal works in construction, has a Social Security Number and makes $25.00 per hour with taxes deducted. Jose Illegal also works in construction, has NO Social Security Number, and gets paid $15.00 cash “under the table”.

Ready? Now pay attention . . .

Joe Legal: $25.00 per hour x 40 hours = $1000.00 per week, or $52,000.00 per year. Now take 30% away for state and federal tax; Joe Legal now has $31,231.00.Jose Illegal: $15.00 per hour x 40 hours = $600.00 per week, or $31,200.00 per year. Jose Illegal pays no taxes. Jose Illegal now has $31,200.00.

Joe Legal pays medical and dental insurance with limited coverage for his family at $600.00 per month, or $7,200.00 per year. Joe Legal now has $24,031.00.Jose Illegalhas full medical and dental coverage through the state and local clinics at a cost of $0.00 per year. Jose Illegal still has $31,200.00.

Joe Legal makes too much money and is not eligible for food stamps or welfare. Joe Legal pays $500.00 per month for food, or $6,000.00 per year. Joe Legal now has $18,031.00.Jose Illegal has no documented income and is eligible for food stamps and welfare. Jose Illegal still has $31,200.00.

Joe Legal pays rent of $1,200.00 per month, or $14,400.00 per year. Joe Legal now has $9,631.00.Jose Illegalreceives a $500.00 per month federal rent subsidy. Jose Illegal pays out that $500.00 per month, or $6,000.00 per year. Jose Illegal still has $ 31,200.00.

Joe Legal pays $200.00 per month, or $2,400.00 for insurance. Joe Legal now has $7,231.0Jose Illegal says, “We don’t need no stinkin’ insurance!” and he still has $31,200.00.

Joe Legal has to make his $7,231.00 stretch to pay utilities, gasoline, etc . . .Jose Illegal has to make his $31,200.00 stretch to pay utilities, gasoline, and what he sends out of the country every month.

Joe Legal now works overtime on Saturdays or gets a part time job after work.Jose Illegalhas nights and weekends off to enjoy with his family.

Joe Legal’sand Jose Illegal’s children both attend the same school.Joe Legal pays for his children’s lunches while Jose Illegal’s children get a government sponsored lunch.

Jose Illegal’s children have an after school ESL program.Joe Legal’s children go home.

Joe Legal and Jose Illegal both enjoy the same police and fire services, but Joe paid for them and Jose did not pay.”..

The Dallas Morning News recently did an article on how the gap between Rich and Poor in Texas is growing. REALLY? You’re just noticing that now?
In Texas the gap between rich and poor is growing. Not only is it true, but they define “rich” as $124K per year and poor at $16K per year. Texas rich is upper middle class up north….barely. And Texas poor, well you tell me how anyone can support a family on $16K a year.

The article ends: “You can either live in Texas, where you may be poor but you have lots of job opportunities, or you can do what these people propose and turn us into Michigan or Illinois, which are hemorrhaging jobs,” he said. “There, if you’re poor, you stay poor.” .

That’s because they’re not over-run with millions of illegal aliens working below the minimum wage for cash. That’s because employers get away with hiring them every day.

It’s because Governor Perry and TxDot are turning every road and highway in what was middle class Texas into “lucrative” toll roads. And that’s their plan for the future…..toll, toll, toll. Why?
We have Fund 6 where all the gas tax money is SUPPOSED to be going, but instead is being siphoned off for other “projects”. Gas prices are 2 weeks away from $4/gallon for regular. In Collin County, STATE HIGHWAY 121 (not supposed to be a toll road), when complete, will cost the average user $1800 a year for their work commute.

The middle class is systematically being wiped out. Sales taxes are at 8.25% and, unlike most States, food and clothes are not exempt. What was the middle class has no discretionary income; no dinners out; no movies. The solution? BRING IN MORE Illegal Aliens! But at least we can brag we don’t have a State Income Tax.

It’s because Texas is re-fighting the Mexican-American War alone and losing. Texas is losing its identity, it’s heritage, it’s culture, and it’s standard of living. Crime rates are up, taxes are up paying to educate, feed, house, and provide free health care for people not legally allowed in this country in the first place.

The Feds don’t care. The Dept. of Homeland Security is such a tangled bureaucratic mess that even divisions like ICE don’t know what they’re responsible for. And the politicians: all they know is Hispanics will be the majority racial group in this country by 2060 and they want those votes at any cost.

They talk about “amnesty”. Ronald Reagan, a giant of a man, badly miscalculated when he gave a million Hispanics amnesty in 1986. I spoke to the Regional Director of ICE recently: they are STILL trying to process those illegals from 22 years ago!
How are we going to give amnesty to 12-18 million more illegals? That will take centuries!

And Texas is losing because it’s culture is passive-aggressive. With a very few exceptions, people and towns take action. Most just smile and say how wonderful diversity is in public, and then go home and rant and rave. So much for the myth of the “plain-spoken Texan”.Meanwhile, half the jobs advertised require bi-lingual language skills, there are Spanish-Only billboards and signs popping up every day, and the people do nothing.…while the small to medium sized business community cashes in.

And now even the big box retailers are joining in. Walmart has more Spanish signage than English in many of their stores. And you can walk the entire length of the store and never hear a word spoken in English. So much for the melting pot theory. What a Great TV Ad for Texas this article would make! I’m sure all the local Texas Chambers of Commerce loved it too..

5. Free Trade

The one question that is running rampant in class is, “Where are the jobs, professor?”
How will America get jobs back in America? How do we jump start the American economy without deficit spending? It appears that all economists — at least the ones teaching — haven’t an answer. It’s all about finding the right “incentives” and “business environment” and BAM… back to the booming 1980s. But perhaps it’s due to the entire economics profession selling out to Wall Street interests or corrupted by age-old economic doctrinaires that DO NOT work in the “real world.”

I, however, offer a different take on why there are no jobs in America and it has to do with “free trade” and the practice that Wal-Mart aka “the Temple of More” is notorious for… outsourcing.

[Image above: Our exports]

Today, economists are blind to the loss of American industries and occupations because they believe these results reflect the beneficial workings of “free trade.” Whatever is being lost, they think, is being replaced by something as good or better. This thinking is rooted in the doctrine of comparative advantage put forth by David Richardio in 1817. In sum, it states that, even if a country is a high-cost producer of most things, it can still enjoy an advantage, since it will produce some goods at lower relative cost than its trading partners.

Today’s economists leading the pack and teaching in academia can’t identify what the new industries and occupations might be that will replace those that are lost (manufacturing), but they’re certain that those jobs and sectors are out there somewhere. We just have to look a little bit harder. What does not occur to them is that the same incentive that causes the loss of one tradable good or service — cheap, skilled foreign labor — applies to all tradable goods and services. But there is no reason that the “replacement” industry or job, if it exists, won’t follow its predecessor offshore.

For comparative advantage to work, a country’s labor, capital, and technology must NOT move offshore. This international immobility is necessary to prevent a business from seeking an absolute advantage by going abroad. The internal cost ratios that determine comparative advantage reflect the quantity and quality of the country’s technology and capital. If these factors move abroad to where cheap labor makes them more productive, absolute advantage takes over from comparative advantage.

This is what is wrong with today’s debate about outsourcing and offshore production. It’s not really about trade, but about labor arbitrage. Companies producing for U.S. markets are substituting cheap labor for expensive U.S. labor. The U.S. loses jobs and also the capital and technology that move offshore to employ the cheaper foreign labor. Many economists argue that this loss of capital does not result in unemployment but rather a reduction in wages. The remaining capital is spread more thinly among workers, while the foreign workers whose country gains the money become more productive and are better paid.

Economists like to call this wrenching adjustment short-run “wage adjustments.” But when the loss of jobs leaves people with less income but the same mortgages and debts, upward mobility collapses. Income distribution becomes more polarized to the upper tiers of society, the tax base is lost, and the ability to maintain infrastructure, pension funds, and public commitments is reduced. Nor is this adjustment just short-run. The huge excess supplies of labor in India and China mean that American wages will fall a lot faster than Asian wages will rise for a long time. That is economic reality.

Until recently, advanced economies retained their capital, labor, and technology. Foreign investment occurred, but it worked differently from outsourcing. Foreign investment was confined mainly to the world’s advanced economies. Its purpose was to avoid shipping costs, tariffs, and quotas, and thus sell more cheaply in the foreign market. The purpose of foreign investment was not offshore production with cheap foreign labor for the home market.

When David Ricardo developed the doctrine of comparative advantage in 1817, climate and geography were important variables in the economy. The assumption that factors of production were immobile internationally was realistic. Since there were inherent differences in climate and geography, the assumption that different countries would have different relative costs of producing tradable goods was also realistic.

Today, acquired knowledge is the basis for most tradable goods and services, making the Ricardian assumptions unrealistic. Indeed, it is not clear where there is a basis for comparative advantage when production rests on acquired knowledge. Modern production functions operate the same way regardless of their locations. There is no necessary reason for the relative costs of producing manufactured goods to vary from one country to another. Yet without different internal cost ratios, there is no basis for comparative advantage.

Outsourcing is driven by absolute advantage. Asia has an absolute advantage because of its vast excess supply of skilled and educated labor. With American capital, technology, and business know-how, this labor can be just as productive as American labor, but workers can be hired for much less money. Thus, the capitalist incentive to seek the lowest cost and most profit will seek to substitute cheap labor for expensive labor. India and China are gaining, and America is losing!Until outsourcing is reversed one should not expect jobs to return to America any time soon. That is just something I like to call the harsh economic reality of 2011!

It’s time to face a brutal truth about the American economy: Even if rising gas and food prices don’thasten a double dip recession, our 200-year tradition of broadly shared prosperity is over. That’s because the great American job machine has been destroyed by a reckless free-trade policy.

Since the end of the cold war, and accelerating after NAFTA in 1994, Washington has pursued a globalized economy made possible by ever-expanding “free” trade agreements. This policy is a major factor in America’s increasing inequality, our rising indebtedness, community abandonment, and the weakening of the industrial sinews of our national security..

[Photo above: Our imports]

About to crumbleThe good news is that this global order of free trade is about to crumble – within the next 10 years at most. The unsustainable American trade deficit alone makes this a near-certainty.
For now, though, America’s economy continues to struggle because our trade deficit – fluctuating around $500 billion a year for a decade now – acts as a giant “reverse stimulus.” It causes a huge slice of domestic demand to flow not into domestic jobs but foreign wages.

Our trade deficit helps Guangdong, Seoul, Yokohama, even Munich – but not Gary, Indiana, Fontana, California, and the other badlands of America’s industrial decline. Washington’s response? Yet more stimulus, leading to an ever-increasing overhang of debt, both foreign and domestic, the cost of whose servicing then exerts its own drag on recovery.

Despite the 216,000 jobs added last month, the American economy has, in fact, entirely lost the ability to create jobs in tradable sectors. This cheery fact comes straight from the Commerce Department. All our net new jobs are in non-tradable services: a few heart surgeons and a legion of busboys and security guards, most of them without health insurance or retirement benefits.

These are dead-end jobs, and our economy as a whole is being similarly squeezed into dead-end industries. The green jobs of the future? Gone to places like China, where governments bid sweeter subsidies than Massachusetts can afford. Nanotechnology? Perhaps the first major technology in a century where America is not the leading innovator. Foreign subsidies are illegal under WTO rules, but no matter: Who’s going to enforce them when corporate America is happily lapping at their very trough?

Part of the problem is that today’s free-trade order is in reality a curious mixture of genuinely free trade practiced by the United States and a few others with the technocratic mercantilism of surging East Asia and Germanic-Scandinavian Europe. It wasn’t always like this.

A history of protectionFrom 1790 to 1945, America grew and prospered in a largely protected economic environment. Our trade then was not “free.” But after World War II, we wandered away from Alexander Hamilton’s vision of a relatively self-contained American economy in order to win the cold war. We threw our markets open to the world as a bribe not to go communist. If we fail to return to a policy of strategic, not unconditional, economic openness, we may lose the next cold war – to a Confucian authoritarianism no less opposed to the idea of a free society than Marxism, and considerably more efficient.

There is an appropriate policy response. For starters, the US should apply compensatory tariffs against imports subsidized by currency manipulation, an idea that originated with Kevin Kearns of the US Business and Industry Council and was recently passed by the House of Representatives. Also essential is a border tax to counter foreign export rebates implemented by means of foreign value-added taxes.

The fundamental reality of free trade is that it relieves corporate America from any substantial tie to the economic well-being of ordinary Americans. If corporate America can produce its products anywhere, and sell them anywhere, then it has no incentive to care about the capacity of Americans to produce or consume. Conversely, if it is tied to making a profit by selling goods made by Americans to Americans, then it has a natural incentive to care about American productivity and consumption.

Productivity and consumption are prosperity. [Think about that. The US has lost productive capacity, there are less production jobs, unemployment has increased considerably and become a structural problem (very long term), the US dollar is declining in value–prosperity is slowly evaporating, like soil moisture before an expanding drought . Mr Larry]

The continuing integration of the rich United States with a far poorer global economy has provoked much anxiety among American workers. Because it is well-known that basic economic theory predicts that global integration leads to gains for all nations, this anxiety is often treated as a political puzzle. A once again fashionable explanation for this puzzle is that globalization’s benefits are huge but diffuse (primarily, lower prices for imported goods), while its costs are small but concentrated (workers displaced by imports); hence, the gains are hard to see, but the losses are all too visible.1

This Briefing Paper reexamines what conventional economics actually predicts about the effects of integrating the rich United States and poor global economies. Contrary to popular rhetoric, there is no puzzle to be explained: conventional economic theory argues that American workers will indeed be harmed by this integration—and their anxiety is well-founded.

The paper also provides rough empirical estimates of integration’s effect on American wages and inequality. Lastly, it uses some prominent forecasts about the future potential reach of service-sector offshoring to make a very rough guess as to the future wage implications of these forecasts.

The key findings indicate:• In 2006, the impact of trade flows increased the inequality of earnings by roughly 7%, with the resulting loss to a representative household (two earners making the median wage and working the average amount of hours each year) reaching more than $2,000. This amount rivals the entire annual federal income tax bill paid by this household.
• Over the next 10-20 years, if some prominent forecasts of the reach of service-sector offshoring hold true, and, if current patterns of trade roughly characterize this offshoring, then globalization could essentially erase all wage gains made since 1979 by workers without a four-year college degree. [A couple decades ago, wives went to work to supplement the erosion of a one income family, that 2nd income is now rapidly eroding; over the next decade or so, lower class and less fortunate children may again need to return to work ‘to help make ends meet’. Mr Larry]
[Before 1938 (when the US Child Labor Laws were enacted), a great many American children worked to help support their families. More recently, because of the loss of substantial numbers of good paying US production jobs, increasing energy prices as we decline from Peak Oil, the US household donsumer debt structure, and erosion of income from 2 income families–we may again see pictures comparable to the one above. When Amazon and Apple market shares tank and Walmart scales back it inventory and floor space, look for a line of ‘Made in USA’, young teens ‘rough and ready work dungarees’ at your favorite clothing retailler.]

Globalization’s real costs: not just unemployment or adjustmentSome readers may think these results are obvious. Nobody, for example, denies that, say, U.S. steel workers displaced by import competition face hardship from trade. These costs, however, are often thought to be small and manageable with temporary government assistance.

This is, however, a radical understating of globalization’s costs. Note that the above example did not take into account the adjustment cost of workers’ unemployment spell between jobs. These adjustment costs are, of course, real and should be of concern to policy makers, but they are not the first-order costs of globalization to American workers.

Rather, the losses identified above are permanent wage-loss suffered by labor in this simple economy. Empirical studies in the trade and wages debate have generally used production and non-supervisory labor as a proxy for labor in the United States, and non-production and supervisory labor as a proxy for professionals. Occasionally, workers with a 4-year college degree stand in for professionals, with the rest of the workforce standing in for labor.

Production workers constitute roughly 75% of the entire U.S. workforce, and workers without a four-year college degree constitute roughly 70% of this workforce. Hence, while gross gains may exceed gross losses in the U.S. as global integration proceeds, it is not necessarily the case that winners outnumber losers. Global integration, in short, has the potential to inflict permanent harm to most American workers, and the scale of this harm is much larger than commonly realized.

3. Wage Slaves

So what exactly is a wage slave? It’s doubtful that you’d be exploring this web site if you didn’t have some idea at least, but for the sake of ease, we’ll clarify further.
Here are some brief and incomplete definitions from CLAWS members:
• “Wage slavery is the state where you are unable to perceive choices and create courses of action different from the grind of the job.”
• “Wage slave: A wage earner whose livelihood is completely dependent on the wages earned.”

The point here, of course, is that we don’t have a single agreed-upon definition of wage slavery. Many of us prefer to focus on wage slavery as a state of mind, while others prefer to focus on the external aspects of wage slavery such as the wage economy. But overall, we seem to sense something rotten at the core of what we’ve been taught about “making a living”, and that’s the place to begin our questioning.

Have you ever noticed how many of us seem to live “lives of quiet desperation”, as Henry David Thoreau puts it? We feel trapped by forces beyond our control, trapped in a mindless job, for the sake of money, status or recognition.We complain that we never seem to have the time for what’s really important to us, because our jobs take so much energy and focus that we hardly have anything left over. We plod along day to day; sometimes we even dread getting out of bed in the morning.

We see the futility of the standard, socially approved path in America. It goes something like this: Go to school, get good grades, so you can get a “good” job, make lots of money, get a mortgage and a car and a spouse, keep up with the Joneses, and be “successful”. We know it’s not the path for us; we want to define success for ourselves. But we don’t know how to forge a new path for ourselves, because, well, what would we do for money if we quit? How would we support ourselves? Sometimes there’s a glazed look in our eyes; it’s as if some part of us has died. We are just doing time, working hard and hoping for the next promotion, waiting for the day when we can throw off our shackles, quit our dull jobs, and finally live life. Everything gets put on hold until we have more time, or more money. Meanwhile, life is passing us by.

Perhaps you are one of these people. If so, CLAWS (Creating Livable Alternatives to Wage Slavery) was created for your benefit. We have news for you: You do not have to live your life that way. CLAWS is here to inspire you to greater fulfillment, and to help you figure out how to get out of the endless cycle of living paycheck to paycheck and feeling chained to a job you don’t care about.

We have other news, too: It won’t necessarily be the easiest thing you’ve ever done. You have a choice, but you may have to re-examine your way of thinking very thoroughly. The pull of the socially accepted way of doing things is amazingly strong, and trips up the best of us despite our good intentions. It takes a certain kind of independent thinker to be “job-free”. We use that term rather than “unemployed”, in an effort to convey to people that we’re proud, not ashamed, of not having regular jobs. We also make an important distinction between jobs and work. All of us do some kind of work, though not necessarily for monetary compensation.

Another thing you’ll need if you decide to rethink your beliefs about jobs and money is the willingness to challenge conventional wisdom. It will take perseverance, and a commitment to throw out the limiting beliefs you may have unwittingly adopted. This is not the path for everyone. If your priority is comfort or social approval, or if you’re the sort of person who doesn’t rock the boat, CLAWS probably won’t meet your needs.

If you embark on this path, it’s important to know what it will ask of you. It may require you to disassemble, dissect, and tear apart your old beliefs, let go of some mighty persistent and tempting illusions, and build a new foundation for your thinking, sometimes from scratch. Are you prepared to do this? If so, you’re in the right place.

Even if you have seen through the false sense of “security” a normal job offers you, and already questioned that approach to life, you may not really believe you can do it. You may still have questions about how to bridge the gap from the old way of life to a new one that you envision. That’s where we can help, dear reader. CLAWS would like to see you devote yourself to the life you’ve dreamed of, the life your heart desires. We don’t want to see you waste your precious days any longer. Life is short, and the time to pursue your dreams is NOW.

In the words of Norman Cousins:“Death is not the greatest loss in life. The greatest loss is what dies inside us while we live.”“The debt and work cycle is an ingenious tool of subjugation. Make people think they need all these things, then they must have a job, and they give up control of their lives. It’s as simple as that. We live in one of the most free countries in the world, but we fix it so we are not free at all

Larry Roth“Capitalism only supports certain kinds of groups, the nuclear family for example, or ‘the people I know at my job’, because such groups are already self-alienated & hooked into the Work/Consume/Die structure.”

Hakim Bey“Supposing we suddenly imagine a world in which nearly everybody is doing what they want. Then we don’t need to be paid in order to work and the whole issue of how money circulates, how we get things done, suddenly alters.”

Robert Theobald“When survival or mere subsistence is at stake, a society can focus only on the overwhelming needs of the moment, and questions of meaningful work and leisure are considered purely academic. But we believe that the world has enough wealth to move all of humanity above survival and subsistence.”..B. Modern Day Slavery, or Debt Slavery
Saturday, January 3, 2009, by Patent Attorney Robert Platt Bellhttp://livingstingy.blogspot.com/2009/01/modern-day-slavery-or-debt-slavery.html

When I discuss Modern Day Slavery, or Debt Slavery, some people freak out, or even say such talk is racist, or some such nonsense. In reality, Slavery has existed for millennia. In the old days of Leviticus and such, slaves were not necessarily Black, but merely folks, who, for one reason or another, found themselves indentured. Typically, invading armies would enslave foes, usually people they deemed to be of lesser intelligence and value.

It was only until the 18th Century that Slavery became associated as a Black-only thing. But the roots remained the same – a view by the slave-masters that they were superior to the enslaved. And even then, the enslavement of Africans was a follow-on to the practice of indentured servitude, which was promulgated in the New World. Once the settlers in the New World ran out of indentured servants, taking Africans as slaves seemed like a natural next step. Debt-slavery conditioned people to accept actual slavery – which is troubling, given the conditions in the world today.

Even today, slavery exists in the world, albeit in a much smaller scale. Oppressed people are coerced into slave-like conditions. The traffic in human misery continues, as women are forced into prostitution, or the poor are kept as virtual hostages as housekeepers and servants in some countries – sometimes even in the US!

But that is not what I am talking about here. While those types of modern-day slavery exist and are deplorable, they are not as common as what might be called Debt Slavery – the defacto condition of servitude that many in this country (and others) find themselves in as the result of economic conditions and consumer debt. While Debt Slavery is certainly not on the level of the traffic in human flesh, it can be debilitating and devastating to its victims. And since it is far, far more widespread, one could argue that Debt Slavery is a greater harm overall.

The conundrum of Debt Slavery is that most victims willing fall into it, through their own actions and by yielding to easily-offered temptation. And like traditional slavery, it disproportionally affects minorities, the poor, and the less educated. However, even white, middle-class folks can end up selling their souls to “the man”.

What is Debt Slavery?In England in the 1700’s, one could literally fall into a real form of Debt Slavery. If one failed to pay the bills and went bankrupt, not only would you lose all your worldly possessions, one could be forced into the workhouse or jail (debtor’s prison) until the debt was considered “paid” or a prison sentence served. Like in antebellum slavery, children were often separated from their parents (as in Dickens’ Oliver Twist) and literally sold.

Reforms brought about in part by stories like Dickens’ have made bankruptcy less harsh. We no longer throw debtors into prison or take them to the workhouse. However, even a lavish prison is still a prison, and many folks in modern America find themselves in perpetual debt. If real slavery were legalized tomorrow, within a few years, a staggering proportion of Americans would end up as slaves, all because of the inability to control spending. People would literally sell themselves into bondage, all for a wall-screen TeeVee.

Debt Slavery might be defined as a condition of perpetual debt, which in turn forces a person to perpetually work in order to pay off this perpetual debt. It is a condition in which a large percentage of a person’s labor (one third or more) is devoted to servicing debt – most of which is payment of interest on debt. A person in Debt Slavery never gets ahead, since as soon as one debt is paid off, another is incurred. A person in Debt Slavery never owns anything, they only owe.

And while reforms since Dickens’ time have made the poorhouse and the debtor’s prison things of the past, recent “reforms” to bankruptcy laws have made it nearly impossible to get out from some debts, particularly student loan debts. The old days, where debts were “wiped clean” are largely past. And as a result, we have created a nation of perpetual debtors, who are forever trying to “work out” their past debts, never to get ahead.

How Do People Become Debt Slaves?One of the most puzzling thing about Debt Slavery is that most, if not all, people who fall victim to this condition willingly sign up for it. In exchange for shiny consumer goods (cars, boats, televisions, clothes, etc.) they sign their lives away, so that they can have it all “now” rather than later. Often this means paying two, three, or four times as much for an article than its actual retail price.

So, for example, a person buys a brand new car, signing up for three or four years of car payments. With interest, they easily pay 1-1/2 times the retail price of the car. Compared to the same car purchased used, they pay double the value of the car. Throw in the added cost of collision insurance over the life of the loan, and (for young people in particular) they can end up paying four or five times the value of the car.

They signed up for this to satisfy the need of the ego to have something new and shiny – and because of weakness – the inability to say “no” to a persuasive salesman. It also is a result of ignorance, or lack of experience or training. Car salesmen and dealers are not going to point out the economic folly of such a transaction. And yet the victim sees all his peers doing the same thing, so he thinks, “This must be an OK deal, right?” Wrong, of course.

Once the process starts, it worsens. Paying too much for one item, like a car, leaves the victim with less money to spend on other essentials, such as car maintenance. When the car is finally “paid for” (or even before) it is in such bad shape that the victim goes back to the dealer to “trade in” – often on onerous terms. Since the car may be worth less than the balance of the loan, sometimes the “negative equity” is folded into a new loan. As the creditworthiness of a Debt Slave is always suspect, and the balance on the loan exceeds the value of the new car, the terms of the loan (interest rate) are staggering.

But the debt slave, seeing only a monthly payment and a shiny new car, signs the papers and kids themselves they are “ahead” of their neighbor who owns and older, paid-for car.
The car scenario is only one major example, and an example of how debt can snowball out of control. Granted, most people don’t end up being scammed as badly as in my example above. But that example is based on the real-world experiences of a friend of mine, so I can say that it does happen.

How Do People Remain Debt Slaves? Once people get into Debt Slavery, it is very, very difficult to get out. Institutions cater to the Debt Slave and continually entice them to staying in its grasp. Once a credit rating is shot, only the worst sort of financing is available to the Debt Slave – interest rates of 20-30% or more.

Catering to the “I have to have it NOW” mentality, enterprises such as Rent-To-Own furniture and appliances sell consumer goods to the Debt Slave for 2-3 times their real market value. A recent trend and extension of this concept is the Rent-To-Own Rims (car wheels) that enslave their victims in exchange for what is literally bright shiny and cheaply made trinkets. The Manhattan Indians were tricked in a similar manner, swapping the Island of Manhattan for $24 worth of beads and trinkets. In the cities today, young men do the same thing for cheap Korean-made “bling” rims.

Of course, once the process starts, the Debt Slave is short of money. Financing companies fill in the gap by providing payday loans, often at interest rates of 300% or more. Each payday loan is folded over into another loan, and never paid off. Tom Wolfe wrote about this practice back in the 1930’s in Look Homeward Angel, in which an unscrupulous local lawyer would loan $20 to the poor, having them pay it back in $1 weekly installments perpetually – to cover only the interest. Once trapped like this, the victims never paid the loan back. In over 70 years, not much has changed.

Pawn Shops, Car Title Loan shops, and other enterprises separate the Debt Slave from the meager consumer goods that they have managed to pay off. For pennies on the dollar, they sell off what little they have in exchange for getting money NOW.
Even if the Debt Slave manages to get ahead somewhat in payments, or gets a raise or promotion, they often fall back into slavery by buying yet another new car or purchase.

Credit Cards merit special mention. Credit Card companies have been very aggressive in recruiting new customers, oftentimes customers they know cannot pay off large debts. They offer large credit lines, knowing that the victims will indulge themselves with purchases of food, clothing, and other consumer items. Once they reach their limit, they will be charged over-limit fees and the like. Since the Debt Slave cannot manage their finances, they may pay a card late, which in turn jacks the interest rates to 20-30% or more, making paying off the debt nearly impossible. And the Credit Card companies have successfully lobbied to pass new laws limiting a debtor’s rights in bankruptcy. The one weapon that debtors had in the past has been severely blunted.

Why Do People Remain Debt Slaves?Peer Pressure is one reason many people remain in Debt Slavery. By this I do not mean the type of pressure to conform faced by high school students. Rather, I mean the tendency of human beings to judge their own actions by the actions of others. If a suburbanite sees that his neighbor is in debt, but has a new car and other desirable consumer goods, then he/she thinks that such indebtedness is a “normal” part of modern life.

Unfortunately, we, as humans, tend to judge our actions this way – by what our peers are doing. And this negative tendency can explain some of the most egregious human behavior. If all your neighbors join the Nazi party, then it certainly doesn’t seem like such a bad thing. Germans were not being particularly evil, they were just being particularly human. The scary lesson here is that any behavior can be adopted on a mass-scale, once people view it as a “norm”.

Or take cigarette smoking – and the campaigns against it. When everyone smoked, the idea of lighting dozens of small, hand-held fires in an aircraft surrounded by aviation fuel seemed “normal”. Today, the “norm” is to be anti-smoking, so smokers can be ostracized. Homophobia worked the same way. Today, homosexuality is accepted as part of the “norm”, but in the not-too-distant past, it was not. What is viewed as a “norm” in society can change, and change very rapidly.

For this reason, the Debt Slavery industry does not want to change what is perceived as normative. Here in Georgia, for example, laws were passed outlawing payday loans. The payday loan industry has fought this, arguing that they are a legitimate business, and that in certain instances, people need such loans to get by – and that the government should not interfere in what is, essentially, a private transaction. Usury laws and the like were also repealed on similar grounds.

The Debt Industry advertises heavily. You probably know the catch-phrases and jingles of most major credit card companies (“What’s in YOUR wallet?”). Payday loan places, Rent-to-Own furniture stores, and the like, all heavily advertise on Radio and TeeVee. Unscrupulous home refinancing deals also advertise heavily, offering the Debt Slave a “way out” – but one paved with toxic ARMS, junk fees, and loan points.

For many people, however, the TeeVee is the source of their normative cues. Most Americans watch 6-8 hours a day, believe it or not. They wake up to the TeeVee, watch it at a restaurant during lunch, turn it on after work, and shut it off before they go to bed. The TeeVee is the ultimate propaganda machine, and if you keep watching it, you will end up brainwashed, no matter what. The best thing to do, is turn it off entirely.

So long as Debt Slavery can be viewed as a “norm,” it will continue. The best thing you can do is stop taking your normative cues from television and your dimwitted neighbors, and learn to think for yourself.

One interesting aspect of Debt Slavery is that on many blog sites and other discussion boards, you will see postings from people who actually defend bad financial decisions that lead to Debt Slavery. While some of these postings are no doubt shilling from the debt industry, others appear to be from genuine individuals who want to self justify their own bad behavior, by convincing themselves that leasing a brand new car every three years or running up debt on an ” airline miles” card really isn’t such a bad thing after all.

So Why is Debt Slavery a Bad Thing?Some might argue that Debt Slavery affects only its victims. And by being in debt, the victims of Debt Slavery have a motivation to go to work every day, and thus it encourages productivity from the masses. Debt Slavery results in a massive transfer of wealth from the people in our society who can afford it least, to a small minority of people and institutions who need it least.

But just as secondhand smoke affects non-smokers, Debt Slavery harms society as a whole, not just its immediate victims. Debt Slavery creates a permanent underclass in our society, an underclass that feels it has been lied to and taken advantage of. The Debt Slave tends to believe, with good reason, that the system is fixed and the game is rigged – that there is no legitimate way to win.

And with ” reforms” in bankruptcy laws, the debt industry has been emboldened to lend money more and more to people they know in advance cannot pay it back. They count on “workouts” and other means of getting their money back, plus copious interest payments. By the time most Debt Slaves think about bankruptcy, they have paid for their credit card purchases at least twice over, with interest charges. Any workout money is a pure bonus for the debt industry. Compare this to the old days, when banks and credit card companies were reluctant to loan money to people they knew would default – as there was a real risk of not being paid back!

Creating a permanent disgruntled underclass degrades our entire society, not just the underclass it affects. Once a person comes to believe, either from personal experience or by watching the experiences of others, that they cannot get ahead legitimately, then criminal activity seems all the more legitimate. The next time you are robbed or your car stolen, ask yourself if the motivation of the robber or thief was pure laziness or merely a sound economic decision based on the perceived choices available to them.
The wealthy have far more to lose by creating a permanent underclass than does the underclass itself.

How do You Avoid Debt Slavery?The key here is to redefine your normative cues. This can be difficult in a city or suburb, or even in the country (Many a farmer has gone bankrupt buying the latest and largest tractor, just because his neighbor has one). Bucking the norm will open you up to ridicule and abuse. But life at the center of the herd is never the richest. Most of the grazing grass at the center of the herd has been eaten down, trampled and pooped upon. The edge of the herd is dangerous, to be sure, but that’s where the prime grazing is.

If you buy a second hand car and then keep it for 10 years, you can be sure that a shallow neighbor will rib you about having an “old car”. This is to be expected, particularly if the neighbor has a shiny new car and a string of car payments (or worse, lease payments). You are challenging their norm, and it scares them. They want to reassure themselves that being in debt is good, and that you are the one who is wrong.

In other cultures, it may be different cues. In Gay communities in major cities, many young men bankrupt themselves trying to appease a mythical “norm” which involves spending enormous amounts of money (all on credit) on clothes, bars, and oftentimes, drugs. Those who challenge such norms will be ridiculed for not having “stylish” clothes and $200 haircuts.

The list goes on and on. Regardless of whether you live on a 1,000 acre farm, an Army barracks, a tract home, or a school dorm, you will be pressured to get involved in many forms of self-destructive economic behavior. It takes strength and resolve to fight these trends and have your own ideas – and follow through with them. Once you have that resolve the rest is easy.

The procedural techniques of what you need to do to get out of debt and stay out of debt are well-known and obvious, and can be summed up in one simple statement: spend less than you make. That is not the hard part. Like a diet, the hard part is willpower.

It is also a good idea to understand the politics of Debt Slavery. Payday loan operators spend a lot of money supporting candidates who want preserve their line of work. Credit Card companies pay lobbyists millions of dollars to get Congressmen to pass laws in their favor. If you vote for such politicians based on their position on “social issues,” for example, but fail to recognize the real dangers to yourself and society, then it is you, not the slave-masters, who are to blame.

Debt Slavery is deadly serious, and nothing to take lightly. And anyone can fall victim to it, without thinking. If you follow the herd and take your cues from the television, chances are you are on your way to becoming a debt slave, if you are not already one.

“Money is the new form of slavery” – Leo Tolstoy 1900 AD
End of part 2 of 3.

Continued in Survival Manual/ 2. Social Issues/ Death by 1000 cuts/ Modern Competition: Part 3 of 3.

Yves Smith at Naked Capitalism has a good post on the declining economic value of college, and the looming danger of massive student loan defaults. Shockingly, a full 50% of college graduates are winding up underemployed:

Take note: half the recently-minted college grads are in jobs that do not require a college degree.

Now if these graduates were going to college for the mere love of learning, and didn’t mind working at Home Depot because they could work on a novel in their garret, this picture might not be quite as terrible as it looks. But I sincerely doubt that anyone in the US goes to college to become a working class intellectual.

But the economic (as opposed to social and personal) value of higher education is exaggerated. The widely-touted College Board claim that lifetime earnings for college grad outpace those of mere high school grads by $800,000 does not stand up to scrutiny. The author of the 2007 study which the College Board relied upon disclaims that estimate and says $450,000 is a better figure. Mark Schneider, a vice president of the American Institutes for Research, who used actual earnings data of graduates ten years after college, and allowed for other factors such as taxes, pegged the difference at $280,000.

And these estimates are averages. Students who are drawn to fields such as architecture, which require advanced education, but are not terribly well paid, will fare less well.

In addition, the value of a degree is premised as much on its scarcity and credentialing value as it is on actual gains in skills. If college educations go from a sign of achievement to a mere social norm, do they really provide that much income benefit to the recipient? James Galbraith, in The Predator State, argued that encouraging more people to get college degrees actually lowered its value, but also served the useful social function of delaying entry into the job market, and hence reducing employment pressures.

But students and their parents have been sold on the value of education as an investment, and it isn’t hard to see why. As higher education costs have skyrocketed, more and more students need to borrow to finance their schooling. The Economist gives an overview:

“For decades, college fees have risen faster than Americans’ ability to pay them. Median household income has grown by a factor of 6.5 in the past 40 years, but the cost of attending a state college has increased by a factor of 15 for in-state students and 24 for out-of-state students. The cost of attending a private college has increased by a factor of more than 13 (a year in the Ivy League will set you back $38,000, excluding bed and board). Academic inflation makes most other kinds look modest by comparison.’

In the stone ages of my youth, many middle class parents could afford to send their kids to Ivy League schools. A year at Harvard, with room and board, is now over $50,000, on a par with median household income.

And perversely, student loans are the only form of consumer debt that is virtually impossible to discharge in bankruptcy.

Thanks to a provision the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act signed into law by then President George W. Bush, the current law only allows the discharge of private student loans in bankruptcy after a showing of “undue hardship,” the same requirement that is made for federal or non-profit backed student loans. Undue hardship requires a separate showing to a bankruptcy judge proving, in essence, that the borrower would never be able to pay off the loan. This is an extremely difficult legal standard to meet.

New graduates are, or at least should be, very attractive to employers. Someone who can’t find a good job right out of school will face even higher hurdles down the road. Paul and Wilson describe how high unemployment rates for young people represent a an economic and ultimately a social problem:

Recent college graduates, those in the labor force with the freshest batch of knowledge and skills, are currently underwater and sinking fast with unprecedented student loan and personal debt. Average student debt for the class of 2008 was $23,200, an increase over four years of about 25%, meaning that students are knee deep in negative equity between their educational investment and actual earnings.

Between inflated student debt and the lack of available jobs for qualified graduates, students are defaulting at an all time high level of 7.2%. From 2008 to 2009, student debt defaults jumped about 30% to $50.8 billion. This earning-to-debt gap not only hurts lending institutions, but also may affect students’ future abilities to borrow – a significant hurdle in our credit driven economy.

If student debt and job stagnation continue, younger workers will face real structural unemployment (as opposed to the fake kind that had been suspected by some economists, but was recently debunked by the San Francisco Fed). The more time these young workers spend unemployed and underemployed, the greater chance for future structural unemployment due to deteriorating human capital.

High debt, high defaults, and low family earnings will prevent many students from finishing college at all. High unemployment for those who do manage to graduate with a degree will create barriers for those unable to start their careers.

This is a slow motion train wreck. Optimistic estimates of economic recovery project unemployment reverting to pre-bust norms by 2015; more realistic forecasts put it at years later. And the more students drop out of college, the worse job market pressures become.

At the end of their piece, Paul and Wilson make a persuasive case for action:
“In order to solve future structural problems in the United States and ensure a future for the sandwich generation, fiscal policy focused on educational and job growth is crucial. While deficit hawks may squawk about the costs, the burden of repayment is on younger people. Without adequate education and careers for students, we will never be able to balance the budget. In the long run, it makes more fiscal sense to create jobs and collect tax revenue than to rely on a model that merely waits for the private sector to invest.”

But the “long run” and “fiscal sense” don’t count for much in deficit debates. Sadly, the very real plight of this cohort is certain to be ignored unless they can find a way to make their needs heard.

Unfortunately, I think there is every reason to believe that the problem will get worse. Technology will increasingly be leveraged to automate the knowledge worker jobs that are often taken by new college graduates, and this is likely to hit especially hard at the entry-level.

I also think the future impact of offshoring is underestimated. We cannot escape the reality that intellectual capability within the population is subject to a normal distribution. This implies that, collectively, India and China have more smart people…than the United States has people. In the future, technology will make it even easier for the millions of people on the right flank of Asia’s bell curve to compete directly with Americans for knowledge-based jobs.

Here is a section from The Lights in the Tunnel in which I discuss the future of college education:“Nearly everyone agrees that a college degree is generally a ticket to a brighter future. In the United States in 2006, the average worker with a bachelor’s degree earned $56,788, while the average high school graduate earned a little more than half this amount, or $31,071. Workers with graduate or professional degrees earned a still higher average salary of $82,320. While the primary motive for the majority of individuals to pursue advanced education is almost certainly economic, we would all agree that education also conveys many other benefits both to the individual and to society as a whole. A person with more education seems likely to enjoy a generally richer existence, to have an interest in a greater variety of issues and is perhaps also more likely to be focused on continuing personal and professional growth. A more educated society is generally a more civil society with a lower crime rate.” An educated person is likely to hang out in the library—rather than on street corners.

The unfortunate reality, however, is that the college dream is likely at some point to collide with the trends in offshoring and automation that we have been discussing in this chapter. The fact is that college graduates very often become knowledge workers. As we have seen, these jobs—and in particular more routine or entry level jobs—are at very high risk. The danger is that as these trends accelerate, a college degree will be seen increasingly not as a ticket to a prosperous future, but as a ticket to a job that will very likely vaporize. At some point in the future, the high cost of a college education, together with diminishing prospects for college graduates, is likely to begin having a negative impact on college enrollment. This will be especially true of students coming from more modest backgrounds, but it will have impact at all levels of society.

This is, obviously, a very unconventional view. Most economists and others who study such trends would probably strongly argue exactly the opposite case: that in the future, a college degree will be increasingly valuable and there will be strong demand for well-educated workers.

This is essentially the “skill premium” argument—the idea that technology is creating jobs for highly skilled workers even as it destroys opportunities for the unskilled. I think the evidence clearly shows that this has indeed been the case over the past couple of decades, but I do not think it can continue indefinitely. The reason is simple: machines and computers are advancing in capability and will increasingly invade the realm of the highly educated. We’ll likely see evidence of this at some point in the form of diminished opportunity and unemployment among recent graduates and also among older college-educated workers who lose jobs and are unable to find comparable positions.

We may not see an actual closing of the gap in average pay for college v. non-college graduates because opportunities for workers of all skill levels are likely to be in decline. I am not suggesting that high school graduates who would have otherwise gone to college will chose to remain completely unskilled, but I do think there is likely to be a migration toward relatively skilled blue collar jobs if there is a perception that these occupations offer more security.

As new high school graduates begin to shy away from a course leading to knowledge worker jobs, they will increasingly turn to the trades. As we have seen, jobs for people like auto mechanics, truck drivers, plumbers and so forth are among the most difficult to automate. The result may well be intense competition for these relatively “safe” jobs. As high school graduates who might previously have been college-bound compete instead for trade jobs, they will, of course, end up displacing less academically inclined people who may have been a better fit for those jobs. That will leave even fewer options for a large number of workers.

We see evidence of this trend already in the daily news. Newspapers routinely report that people are specifically seeking jobs that can’t be off shored. Much is made of new “green collar jobs that cannot be outsourced.” While this is certainly a desirable development, we have to acknowledge that the bulk of these jobs are going to involve installing solar panels, wind turbines and so forth. They are trade jobs; not jobs for college graduates.

The cost to society of such a turn away from education would be enormous. It would damage the hopes, dreams and expectations of our children and potentially rob them of things that we ourselves have come to take for granted. Those workers whose prospects were diminished by a new influx of more “book smart” competitors would become even more dispirited and more likely to turn to crime or other undesirable alternatives. This hash new reality would fall most heavily on people in disadvantaged sectors of the population. Finally, and perhaps most chillingly, a trend away from college would rob us of talent we may well need in the future.

2. Consumer Debt

The latest statistics from the Federal Reserve indicate that the total amount of consumer debt outstanding remained fairly steady in 2010. The total amount of consumer debt in the United States stands at nearly $2.4 trillion. Based on the 2010 Census statistics, that works out to be nearly $7,800 in debt for every man, woman and child that lives here in the U.S.

If you’re saying to yourself – that that statistic doesn’t seem quite so bad – keep this in mind: We’re talking about consumer credit, which does not include debt secured by real estate. If you thought that number has debt associated with mortgages, it doesn’t.

Consumer Credit BreakdownSo just how does that debt breakdown in terms of credit cards or the purchase of a new automobile? Roughly 33% of all consumer debt, as of October 2010, is what is termed revolving credit. This is credit that is repeatedly available as periodic repayments are made to lenders. The most common type of revolving credit would be credis card debt.

The other 67% of that debt is derived from loans that are not revolving in nature. This type of debt would include automobile loans, student loans, as well as loans on boats, trailers, or even vacations. In fact, these statistics also tell us that the average new car loan is over $27,600, and the loan to value ratio is 83%. That means new car buyers are using down payments that are 17% of the car’s purchase price.

Credit Card DebtAccording to information gathered by the US Census bureau, there were approximately 173 million credit card holders in the United States in 2006, and that number was projected to grow to 181 million Americans by the end of 2010. These same Americans own approximately 1.5 billion cards, an average of nearly nine credit cards issued per credit card holder.

In addition, Americans charged approximately $1,950 billion to their credit cards in 2006. That’s just over $11,300 in charges per cardholder. This information includes all credit card types such as bank cards, phone cards, as well as credit cards issued by oil companies and retail stores.

This data also tells us that Americans carried approximately $886 billion in credit card debt, and that number is expected to grow to a projected $1,177 billion by the end of 2010. This works out to over $5,100 in credit card debt per cardholder (not household) and that number is expected to increase to over $6,500 by the end of 2010.

[The above chart shows credit card debt on a per-household basis,compared to and dwarfing median household income growth since 1980.]
Bankruptcy and Consumer DebtIn January 2008, the American Bankers Association reported credit card accounts that were 30 or more days past due dipped slightly to 4.18% in the fourth quarter of 2007. That’s good news because it means more consumers are paying their bills on time.

But even with this decline in late payments, credit card delinquencies were at the third highest level on record. To James Chessen, ABA’s chief economist, that can signal financial distress, and he attributes this distress to the rise in gasoline prices as well as rising interest rates.

In January 2010, Fitch Ratings reported the number of cardholders 60 or more days late on payments stood at 4.50%. Cardholders that were 30 days late declined to 5.72%. Both of these values are significantly higher than reported by the ABA back in 2008.

Bankruptcy FilingsDespite the Fed’s feelings about consumer credit, the bankruptsy law changes that were instituted in the fall of 2005 resulted in a rush of indebted consumers to file for bankruptsy. At that time, personal bankruptcy filings rose to their highest levels on record, with estimates in excess of 2 million filings.

The trend in stagnating or falling real wages has been happening since the 1970s.
The chart below shows household debt as a percentage of GDP. Once wages began to stagnate, households turned to borrowing to make up the difference. You can also clearly see that the debt-fueled housing boom begin around 2001. Consumer spending makes up more than 70 percent of the economy, and it usually drives growth during economic recoveries. Households are now beginning the painful process of deleveraging by cutting back on spending and paying down their debt.

Consider these sobering facts from the article:
• American consumers are on track to buy 28 percent fewer cars in 2011 than in 2001.
• Sales of ovens and stoves are at their lowest level since 1992.
• Americans’ “discretionary service spending” (i.e. restaurant meals, entertainment, education, insurance and other categories) is own 7 percent – more than any other time in history.
• Walmart’s CFO has mentioned that Walmart customers are buying smaller packages at the end of the month – a sign that these families are literally running out of money each month.
• The U.S. unemployment rate has risen 5 percentage points in the past four years..

National identity cards, a national road toll system that will charge car users large sums of money for driving at peak times by 2014. The government has already given warning that the current pension system, is not in the long term affordable. In the summer of 2004 the UK government announced that it was prudent that people should put three weeks worth of food aside for emergencies (the BBC ran several pieces on this), mainly terrorist attack. Along with plans to base the army at food depots during the next fuel strike and you begin to understand that we have all quietly been put on notice..
[Note: The USA Gov’t. has increased the recommended amount of household emergency food storage from 72 hours (3 days) to 5 days–as opposed to the UK’s 21 days. Who do you suppose is the most in error. It occassionally takes 3 days just to enter a damaged area, mush less beging to service the needs of the surviving residents. Mr. Larry]

For the majority of us, our standard of living is better than it has ever been. You just have to look around to see all this newfound wealth – although with the UK consumer debt having topped the £1 trillion mark last summer (including mortgage debt), you begin to wonder. Many homeowners discovered in the last few years that their homes are worth so much more than they paid for them, so they have borrowed extra, to finance home improvements or a new car and holidays. This new wealth is in reality huge debt running on borrowed time.

Most of our recent increased personal wealth, seen as new cars, home improvements, bigger homes, two holidays a year and expensive electrical goods, has been funded by personal borrowing. One of the most popular forms of borrowing has been to extend mortgages, as the UK has over the past few years seen a huge housing boom. Increased borrowing on a mortgage is the most expensive form of borrowing. The interest is paid over a very long period and unfortunately the housing bubble will be the first to burst in an economic down turn, leaving many people out in the cold so to speak.

You are probably thinking this is all very interesting and you have probably heard some of it before, “so what has this got to do with me?”

Since we have done nothing to prepare for the coming oil shocks, we are completely reliant on increasing our supply of oil to power all of our transport needs, our food production, our manufacturing of goods and 40% of our total energy needs. With an economy that is based on perpetual growth, this is very bad news. As a lack of surplus energy, means a lack of economic growth.[As it becomes more difficult to service debt, debt ceilings will be lowered for many and the lines of credit cut off for most. Mr. Larry]

It is generally given in simple terms, that a shrinking oil supply will mean a recession and high prices for all goods. In a recession, people tend to lose their jobs and spend less money. Thus the spending of less money – a consumer downturn – makes the spiral even worse and more people lose their jobs.

I had a conversation with a friend who works in the airline business the other day. He has known about the basics of peak oil for a while and could see the price of oil continuing to rise into the future. He suggested that as the price of crude oil increases and thus the price of holidays and flights, people would just pay more as they wouldn’t stop travelling to go on holiday.

This idea is very common, put completely incorrect. In the short term this might happen. Although as many people lose their jobs and there is less money around as the economy enters into a crisis, the majority of us will not be going on holidays abroad whatever the cost. Many companies will go to the wall. Not only will there be less money available, but also less goods. It’s a spiraling down effect that will continue, even if we manage to find a miracle that can replace oil, for many years.

If I could offer you three pieces of advice that would make your life easier in the future, it would be the following;
a) Get out of debt, b) Reduce your debt base, c) Pay off your debts.

The future is likely going to be tough. Many changes will happen and we will have to change our very ideals and ways we live. Governments have known about this for years, but the changes that are needed to secure our futures are unpopular and not vote winners. So nothing will be done, until it becomes complete obvious to all that we really are in trouble and most of our beliefs about our lives and prosperity come crashing down around us.

If you are up to your eyes in debt, with a mortgage, loan(s) and credit card(s), what will happen when you lose your job or are forced to take a job paying substantially less than you need to service these debts? “Your house is at risk, if you are unable to keep up the repayments on it”. This well-known phrase should give you an idea of what is likely to come. The economic downturn that brought on the last housing market crash in the early 90s was small, compared to the possible energy crisis ahead. Many people lost their homes and were left with huge debts. The current housing boom has taken personal debt to new highs and left many families very vulnerable.

I can’t stress the importance of this. Having excessive debt is going to make things very difficult. Although, I do think it is important to have some sort of balance, between this and things that you want to do in your life. What I mean by this is, if you have always wanted to travel the Far East or back pack round the world, now is the time to do it. It’s a balancing act, between getting your life in order and enjoying the party, whilst we are still living through it.

Try to clear loans and credit cards and reduce your mortgage. This is far more important in the long term to your well being, than buying a new car (or the latest plasma screen, dishwasher etc), when a cheaper second hand model is adequate. You could also sell expensive assets to help pay off your debts or mortgage quicker, i.e. downgrade from a prestige car to a more economical cheaper model. You might decide that this is the right time to sell your house/flat in London and move to a house in the country or a small town, thus reducing your mortgage..

On the macro level, we may be concerned about the negative impacts of globalization and so-called “free trade.” We may also be uncomfortable with the kind of planet-destroying capitalism that has sprung up under the giant international corporations. But there is more – much more – we need to understand about how economics is impacting our personal and collective lives and the health of our planet.

The economic consequences of globalization and late stage hyper-capitalism are reaching a crisis point that will be felt by most of us in the next few years “up close and personal” – probably even before we feel the immediate results of peak oil or global warming. Even if we are doing everything we can to live a low-impact, sustainable lifestyle, we need to understand what’s happening in the U.S. and world economies.

The Big PictureWe have lived most of our lives in a growth economy, and our society has been getting rich off the consumption of cheap fossil fuel. That “free ride” up to Peak Oil and along the gradually declining top of the curve, is just about over, while a number of disturbing economic trends are appearing that spell big trouble for oil-dependent economies and for the average U.S. citizen. The era of endless “economic growth” is coming to an end. The Energy Descent economy has begun.

So let’s examine eight worrisome economic trends. They are interconnected and when stirred together create a nasty brew…

America has forgotten Charles Dickens’ famous words of wisdom. We are collectively trying to buy happiness by going on the greatest credit binge in the history of humanity.

Here are a few of the shocking facts:
• The Federal Reserve reports that Americans collectively owe $2,164 trillion, of which $804 billion is credit-card or other revolving debt. By 2001, Americans were paying $50 billion a year in finance charges to service their debt and that number has since climbed higher. The average American owes $8,562 on their credit card(s) and will need ten years to pay that amount off at the minimum payment. At that point, they will have paid out over $16,000 or almost double the amount they originally borrowed.
• These levels of personal debt are virtually enslaving Americans, forcing many of us to work harder and harder, for longer hours, at often meaningless corporate jobs in order to pay off our obligations. And bankruptcy laws have recently been hardened to make it even more difficult to escape the impact of serious personal debt, often caused by huge medical bills as well as our own intemperance.

_2. The Real Estate BubbleThanks to low interest rates, Americans have been on a real estate binge, buying any property at any imaginable price in the belief that real estate will appreciate forever. Interest-only loans, variable interest loans, balloon payments and low- or no-down payments have become the norm in the usually conservative world of home loans. The result is that as interest rates continue their inevitable ride upwards, many recent home buyers are going to see their home payments rise beyond their ability to pay. And as home prices begin to fall, and perhaps collapse, some home owners are going to experience negative amortization. That means that every month, instead of the equity on your home increasing, it will decrease and the total amount you owe will increase.

As real estate prices soften, which is already happening on the South Coast and elsewhere, foreclosures may rise as people go “upside down” on their loans, owing more on their mortgage than their properties are currently worth. Banks, stuck with unwanted properties, may begin to sell them at fire-sale prices, further depressing the price of real estate.

Any fall in real estate values is especially worrisome as some Americans have been using their home equity as a kind of last-resort personal bank, taking out second mortgages to pay off credit card balances, do home remodels, buy cars or take expensive vacations. Others have used their equity to pay monthly or extraordinary bills, masking the fact that it’s getting harder and harder for many Americans to retain a middle class lifestyle in the era of outsourced jobs and flattened incomes.

_3. Our Savings RateThe citizens of the United States can now boast having a negative savings rate. We remove more money every month from our collective piggy banks than we put in. The average baby boomer will retire with a net worth of $23,000. The parents of baby boomers left their children far better off than the baby boomers are going to leave their children. Perhaps we can partly blame boomers’ extravagance, consumerism and sense of entitlement. But we also have to look at changes in the U.S. economy that have allowed those at the top to earn more and more while paying less and less taxes, while the middle and working classes are being squeezed with job losses and the export of much of our manufacturing.

_4. The Bond BubbleThis is a little more obscure problem, but worth understanding. As interest rates have been increasing on short term debt, the interest rates on long term debt have remained stubbornly low — probably because of foreign investment in U.S. Treasuries and the fact that U.S. currency has been until recently the preferred currency to accept payment in. Recently a 90-day Treasury bill paid approximately the same interest rate as a ten-year bond. As interest rates keep rising, the value of bonds may plummet, causing many people to lose a lot of money in supposedly safe and secure U.S. Treasury Bonds.

Bonds are confusing to most people. High interest rates mean that the price of existing lower-yielding bonds falls. Why buy an existing bond paying 5% when you can get a new bond paying 6%? Much of this U.S. debt is of course held by foreign countries, most notably China. If foreign countries ever panic and begin dumping U.S. Treasuries, we will see interest rates rise dramatically and we will be very lucky to escape a full blown depression.

_5. Government DebtWhatever happened to old fashioned conservative fiscal responsibility? Thanks to George Bush and his imbecilic economic policies, we have now become the nation with both the largest personal debt and the largest government debt. Our military policies are hugely expensive as well as immoral and stupid. And as the effects of Peak Oil and Energy Descent begin to be felt, we will have little wealth available to invest in new solutions.

If we are lucky enough to elect one of the hapless Democratic candidates for President and this person turns out to be a Franklin Roosevelt disguised as a centrist Democrat, he or she will have none of the maneuvering room, that Roosevelt had, to get us out of the economic depression that we may face in the not too distant future. Roosevelt was able to keep the much smaller federal budget of that era in balance while spending on programs to jump start the economy. Today’s Bush economics will leave a great deal of our federal budget servicing the debt the fiscally irresponsible Republicans have run up.

_6. Inflation and Higher PricesBy lowering interest rates to practically zero to encourage false and unsustainable economic growth, the Federal Reserve under recently-retired Chairman Alan Greenspan set the stage for inflationary pressure in the economy. Virtually non-existent interest rates not only fueled the current real estate bubble but made borrowing in general too cheap and easy. This conned millions of Americans into a borrowing binge that has left us deep in debt to the banking industry. If we cannot pay those debts, the banks themselves may also falter.

_7. Loss of True ProductivityWhat does America actually produce these days? Our financial services sector is now far larger than our manufacturing base. In other words, the business of America is moving money around. And what happens to this truly unproductive economy when the shaky American dollar falters or exorbitant fossil fuel prices make it impossible to import what we need?

_8. The Shaky U.S. DollarA currency has to be based on something of true value. But the U.S. dollar is increasingly dependent on its status as the world’s default currency rather than the underlying worth of America’s productivity. So what would happen if oil producers, for example, decide they’d rather be paid in Euros than dollars?

Add it all up…

So what do these eight interconnected trends add up to? An unsustainable situation, a house of cards waiting for a tiny breeze – another spike in oil prices caused by a natural or terrorist supply glitch, a sneeze from our major creditor: China, a major oil producer requesting payment in Euros, another bad hurricane season – to start the downward cascade.

How You Can Survive and Thrive in Spite of these TrendsThe solutions at the individual level are clear:• Stay out of debt, and if you are in debt get out ASAP. If you don’t pay your credit cards off in full every month, get rid of them and use a debit card.
Even if you aren’t in credit-card debt, consider getting rid of your cards anyway as a political act. Credit cards have tricked and deluded Americans into feeling richer than we actually are. They start arriving in the mail while we are in college so we get hooked young. Then these plastic handcuffs enslave many of us, creating an illusion of wealth and disguising the fact that our salaries have stagnated and fallen. This has benefited politicians and banks, not ordinary people. Credit cards lock us into the world of materialism, consumerism and greed and keep us like hamsters in a treadmill, running to keep up, going nowhere. If you think of debt as an addiction, the credit card companies are the pushers.• Find work that has a future in an energy descent economy in which “economic growth” is a relic of the pre-Peak past.• Learn to take your pleasures from simple and sustainable living. Live at or below your means and save for the future, even if you can sock away only a few bucks a month. Let friends, family and spiritual pursuits replace consumerism and greed. The Voluntary Simplicity movement has done a great job of showing us how to enjoy a rich and satisfying lifestyle without excessive materialism. And Permaculture offers the practical tools for sustainable living that increase our real prosperity and the true wealth of the earth rather than squandering it on the impossible nightmare of endless economic growth at the cost of environmental and social destruction..

Debt life stages (discussed in paragraphs below)College: As the cost of higher education soars, more students are taking out loans.Young singles: At a time when people don’t have much money, they need it to get established.Young families: Having children can stretch finances to the breaking point.Mature families: A time of relative security, but maybe too much spending.Empty nesters: Now it’s time to help the grown-up kids.Retirees: Time to relax? Maybe.

An indispensable tool in modern life, debt happens for many reasons.

As the economic struggle of the 1930s Depression and rationing of World War II fades from the collective consciousness, Americans feel more confident taking on debt and optimistic about their ability to pay it all back and start saving one day in the future.

Robert Manning, author of “Credit Card Nation,” studied the financial practices of Americans across generations to discover what influences spending in specific age groups. The research professor and director of the Center for Consumer Financial Services at Rochester Institute of Technology also examined the different attitudes toward debt to find out why people owe so much more today than they did 40 years ago.

“You really can’t overgeneralize,” Manning says. “You have to look at people in particular life cycles to find out why they spent more on those particular items than did a previous generation.”
Experts explain that debt starts from youth and continues on through life, often into those not-so-golden years.

College“Borrowing to pay for college has become the primary way that most students pay for college,” says Tamara Draut, director of the Economic Opportunity Program at Demos and author of “Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead.”
Parents unable to save the staggering amount of money needed to fund their children’s undergraduate degrees have a few choices. They can go into debt by getting a plus loan or by taking out a second mortgage — or they can put the burden on their children.

“If you look at the way we used to do it, we had pressures on states to keep tuitions low and affordable for middle-income households, and for lower-income households we had grant aid that covered about three-fourths of the cost of going to college,” Draut says.
“Now the majority of aid is debt-based aid and the grants cover about a third of the cost of school.”

According to the College Board’s “Trends in College Pricing 2007,” average tuition costs for the 2007-08 academic year are $23,712 at a private school and $6,185 for a public school. Add in room and board and the totals come to $32,307 and $13,589, respectively.
The borrowing doesn’t stop there for college students. Undergraduates make easy targets for credit-card companies that often give out swag for signing up for a card. “Young people are starting off graduation not only in debt, but it also shows that that competitive pressure that they experienced in high school is what they see as the norm when they go to college,” Manning says. “As we start to see the competitive consumption start at an earlier and earlier age, it’s not surprising that it then continues in older age groups,” he says.

Young singlesGetting established in the world costs money — lots of money. In a cruel twist, people fresh out of school often don’t have a lot of it. Some lucky people can fall back on their parents for help, but not everyone has that option or wants to take it.

“It’s unfortunate, but people have always judged others on superficial stuff. So you have to have nice clothes, a nice car, a nice apartment,” says Lewis Mandell, professor of finance and managerial economics at the University of Buffalo.
A recession may mean that college graduates won’t be able to waltz into a cushy corporate job that offers ample pay for a worker bee living in the big city.

“Earnings have been really flat for young people with college degrees,” Draut says. “Incomes are not really keeping up with costs, but one particular difference is that you’re talking about a starting salary and a lot of debt that has to be repaid,” she says.
With tight budgets and soaring living expenses, young people end up on a tightrope between paydays and too often credit cards are their only safety net. “There is not a lot of cushion left at the end of every month, which makes young people very vulnerable to amassing large amounts of credit-card debt when the car breaks down or when they need to go to the dentist,” Draut says.

But if college graduates are feeling bruised by harsh economic realities, those without degrees feel it even more. “The potential for a young worker without a college degree has plummeted within a generation,” Draut says. “They make a lot less than they used to and all of the benefits that we used to think of coming with your first real job have disappeared.”

Young familiesFor young people already struggling with living expenses and stagnating wages, adding a baby can stretch finances to the breaking point.
According to Draut, couples with children are twice as likely to file for bankruptcy.

“This is a time when you’ve got loans that have to be repaid,” she says. You have earnings that are starting lower and growing slower, and then you add a new baby into the mix — which has always been an added expense. It’s nothing new for this generation. “What’s new is that those student loans, those credit cards, don’t go away overnight.”

This life stage also ushers in new housing needs. Whereas a studio or one-bedroom apartment may have been sufficient a couple of years earlier, with the addition of a spouse and a child, space becomes an issue — as does the school district.
“You get married in the late 20s now in the states and you have a kid and then you want, of course, to live in a nice house in a neighborhood with a good school. The American way of life virtually compels most people to take on a lot of consumer debt and it doesn’t really give you an opportunity to get rid of it,” Mandell says.

Home values in good neighborhoods force many young families to confront difficult choices. The best jobs are in metropolitan areas, but those areas don’t come cheap, Draut says. “A starter-home market has disappeared for a lot of high-cost areas,” she says.

Mature familiesTypically, mature families have reached a certain level of security. But Manning found that families in this age group spend more and save less than did previous generations.
“One of the most striking findings of my study was the elasticity of demand for people who have children — there’s never a good reason to not indulge our children these days,” Manning says. “Instead of saving money for their children to go to college, parents are spending that money while the kids are in high school.”
Indulging the short-term whims of teenagers can further perpetuate the debt cycle, obligating children to take on loans for college as well as diverting money from retirement savings.

Debt in this stage can be particularly precarious, especially if savings are spare. Many parents take on debt to fund children’s education — for instance, by taking out a second mortgage — which puts them in the uncomfortable position of either entering retirement with debt or using money that would otherwise be saved for retirement to service the debt.

If parents put off saving for retirement until the kids are out of the house and out of school, they may not have enough time to accumulate adequate funds. “It just means that people aren’t going to be able to retire, and that’s fine for people who enjoy their work and are in good health. But for people who aren’t in such good health, that’s one of the costs of debt that’s going to really come back and bite them,” Mandell says.

Empty nestersIn his study, “Living with debt,” Manning found that older people weren’t necessarily shifting their spending into a lower gear.“By the time we see older people, they are used to living on debt and don’t want to cut back on their standard of living. So they’re maintaining. While their savings rate may go up, they’re spending more — maybe on helping their children. “It was remarkable how many people in their 50s, 60s and 70s are helping a child or maybe a grandchild,” Manning says.

With the kids out of the house and the accompanying pipeline into the wallet of mom and dad removed, empty nesters should be sitting pretty.

Using data from the 2001 Survey of Consumer Finances conducted by the Federal Reserve, Tansel Yilmazer, assistant professor in the Department of Consumer Sciences and Retailing at Purdue University, found that debt does decline with time.
“In general, the probability of carrying debt decreased with age,” she says.
However, some experts think this could be changing, or shifting with the changing demographic. People are having children later in life and reaching the empty-nest phase later as well. As acceptance of debt has increased, the older population is increasingly indebted.

“Some of them, of course, are maybe opting to work longer periods of time. That certainly is a trend that may be part of the changing life cycle stages,” Mandell says.
But he adds that attitudes toward debt at this stage are also changing.
“Also I think that the thinking that ’60 is the new 40′ is really encouraging older people who might in previous generations have been a little bit more sedate in their lifestyles. Now you look on TV and see a 60-year-old doing helicopter skiing and sailing boats across the Atlantic single-handedly. So I think the notion of settling into an empty-nest sedate lifestyle is going against the grain.”

RetireesRetirement is on shaky ground. No longer assured of pensions, today’s retirees are easing into their golden years with less savings and more debt. If acceptance of debt and lack of savings are symptoms of the debt epidemic, this stage of life is where the ravages of the disease really flare up.

Throughout their lives, people are spending what they used to save, Manning says. “And so the real crisis is being deferred to retirement.”
“We’re seeing retirees leaving the workforce now with as much as $60,000 in unsecured debt,” says David Jones, president of the Association of Independent Consumer Credit Counseling Agencies.

The cycle of debt has a domino effect. As today’s young people take on more debt for education, they will spend the money they should have been saving for their retirements to pay off that debt.
Today’s retirees are also affected by skyrocketing education costs. “A bigger percentage of retirees today still owe on their mortgages and that’s not isolated from what’s happening to young people around college. A lot of people are taking out second or third mortgages to help pay for college,” Draut says.
“That’s moved mortgage payments to the retirement years which used to be much more uncommon than it is today.”

For older Americans in good health, that leaves only one option — work. Those that find themselves in debt and in poor health will struggle.“There are going to be very bad endings for a lot of people,” Mandell says.He points out expected cuts in Social Security and diminished pensions. “The one thing that may save them is that, with the shrinking labor force, if they are valuable to their employer, they might get the opportunity to work until they’re 92,” he says.
“This may not be what people had originally hoped for.”
End of Part 1 of 3.

Continued in Survival Manual/ 2. Social Issues/ Death by 1000 cuts/ Modern Competition: Part 2 of 3

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